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Cannabis stock report: Marijuana stocks bounce back following a pep talk from Fed Chairman Jerome Powell

By Brandon A. Dorfman
Nov 29, 2018

The North American Marijuana Index bounced back on Wednesday, as cannabis stocks soared on the positive sentiments of Federal Reserve Chairman Jerome Powell, who called interest rates "just below" neutral for the economy.`His words calmed investors who had been bailing out of the market in recent days.

"It is important to distinguish between market volatility and events that threaten financial stability," Powell said to a group at the Economic Club in New York. "Large, sustained declines in equity prices can put downward pressure on spending and confidence. From the financial stability perspective, however, today we do not see dangerous excesses in the stock market."

The rally was led by India Globalization Capital Inc. (IGCC), which jumped 36 percent to $0.59 on rumors of a new cannabis-infused drink. It was a banner day for Canada’s top Licensed Producers as Aphria Inc. (APHA), Aurora Cannabis (ACB), and Canopy Growth (CGC, WEED) all made significant gains.

[Health Canada releases findings of 2018 cannabis survey]

Still, not everyone walked away with a healthy portfolio on Wednesday as names like Origin House Inc. (ORHOF) and Tilray (TLRY) fell.

In the end, the Index 13.20 points, or 5.44 percent to close out the day at 255.98, with the United States Marijuana Index gaining 5.33 percent to end the day at 109.69 and the Canadian Index rising 28.49 points to close out the day at 554.21.

The benchmark Horizon’s Marijuana Life Sciences ETF shot up CA$0.55 ($0.41), or 3.19 percent to end the day at CA$17.77 ($13.39), while the ETFMG Alternative Harvest ETF (MJ) gained $1.12, or 3.91 percent, finishing out Wednesday at $29.77.

Powell lifts up all of Wall Street

It wasn’t just marijuana stocks that received a boost from the Fed Chairman on Wednesday, as investors across the board took to buying what they could following his remarks.

“Interest rates are still low by historical standards, and they remain just below the broad range of estimates of the level that would be neutral for the economy‑‑that is, neither speeding up nor slowing down growth,” said Powell on Wednesday. It was a contrast to remarks he made last month, calling interest rates a “long way” from neutral. Those earlier comments were blamed for causing a massive sell-off by many investors.

[Cannabis daily: CWEB disappoints, so does iAnthus, and Mitch McConnell will too]

Still, some argued that his comments were misunderstood. “[Powell] was very careful to present both upside and downside risks [to the economy],” said Torsten Sløk, chief international economist at Deutsche Bank according to Yahoo Finance. “The market is putting too much weigh on the dovish arguments here; I don’t think that is what he intended to signal.”

The Dow Jones Industrial Average gained 617 points, or 2.5 percent, to end the day at 25,366.43, while the S&P 500 Index gained 2.3 percent, finishing the day at 2,743.79. Finally, the Nasdaq composite jumped 2.9 percent to close out at 7,291.59.

1933 Industries reports not much of interest

1933 Industries (CSE:TGIF) (OTCQB:TGIFF) announced their fourth-quarter and year-end financial results, and overall things looked positive without anything jumping off the page for the Las Vegas-based company. They saw record revenues of over $12 million for the year, with overall gross margins of 49 percent. Moreover, the company holds assets of well over $40 million and offers a diverse product lineup.

[Cannabis stock report: Marijuana stocks plummet as House GOP attempts to derail farm bill]

Notably, however, their much-ballyhooed deal with Spire logistics appears to be a bust at the moment. After paying nearly $5 million for the security company, it barely brought in $90,000 worth of revenue this quarter. Still, CEO and President Brayden Sutton was pleased with the company’s overall results.

"1933 has invested significant capital in building out our new cultivation and production facilities in Las Vegas, which will be operational in the new year," said Sutton in a statement. "The [company] is actively expanding its footprint in Nevada, California, Colorado and is currently evaluating opportunities in other legal jurisdictions."

Who is Wayland Group’s Ben Ward?

High Energy has a fascinating look at Wayland Group CEO Ben Ward, in a piece that does everything from accusing him of hanging out with mobsters to making “sketchy” cannabis deals. It all culminates in a story of a $42 million loan that Wayland took out when they were still called Maricann, which appears to be from a company that doesn’t exist. It’s worth a read —minus the self-congratulatory back-slapping towards the end of the piece that seems to be a staple of modern-day internet journalism—and a good look into some of the seedier parts of the cannabis industry.

[Cannabis daily: MarketWatch took down IGC (and wants you to know about it), wholesale prices continue to fall, and everything else you need to know about marijuana this morning]

If anything, Ward's Twitter response to the whole thing, where he apparently accuses the publisher of the wrong website of defamation makes the whole thing worthwhile.

Who’s up and who’s down?

Isodiol International Inc. (ISOL:CNX) ended the day at $1.75, gaining $0.39 per share, or 28.68 percent… CV Sciences Inc. (CVSI) closed out the day at $4.50, a gain of $0.95 per share, or 26.76 percent… Cannex Capital Holdings Inc. (CNNX:CNX) closed at $0.99, up $0.14 per share, or 16.47 percent.

Origin House (OH:CNX) finished the day at $7.90, down $0.36 per share, a decline of 4.36 percent… Tilray Inc. (TLRY) close dout Wednesday at $110.88, down $3.12 per share, a decline of 2.74 percent… Innovative Industrial Properties Inc (IIPR) ended the day at $49.66, down $0.51 per share, or 1.02 percent.

Pete Kadens of Green Thumb Industries

Check out Pete Kadens of Green Thumb Industries as he goes three deep with Merida Capital Partners in this brief, but interesting interview below:

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