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Cannabis Stocks Rally As Marijuana Markets Rebound On Industry Assurances

Marijuana markets rebounded as cannabis stocks rallied on Friday, one day after U.S. Attorney General Jeff Sessions rescinded an Obama-era policy allowing cannabis companies free reign in states where marijuana is legal. In the U.S. industry insiders took to the press, signaling shareholders that it was business as usual while reminding the Trump administration just which way the political winds are blowing when it comes to cannabis. Canadian cannabis companies who took a hit on Thursday, bounced back on Friday as well, on the realization that bad policy in the states may be good business up north. Wall Street had another day of record highs, capping off an intense first week of the new year. However, a mediocre jobs report put a damper on the excitement. Meanwhile, Canada’s top exchange ended its rally on Friday, losing for the first time this year. All major marijuana indices and ETF’s climbed higher on Friday following Thursday’s near-crash of the cannabis markets. Still, The fundamentals of the marijuana market at this time are volatile at best, as CEO’s scramble to assure investors their money is secure and Canadian companies swear solidarity while starting to dream of a fatter market share.

Around The Markets

It was a mixed day on the broader markets, as Wall Street continued to hit record highs while the Toronto Stock Exchange fell for the first time in 2018. Tech stocks ruled the day again in lower Manhattan as both the Nasdaq and the S&P 500 had their best week of the past twelve months. The Nasdaq climbed to 7,136.56, while the S&P 500 jumped to 2,743.15. However weak jobs data showing less than expected growth in nonfarm payroll and an unemployment rate holding steady at 4.1 percent dampened the enthusiasm a bit. Across the border, it was a different story as a booming jobs report in Canada did nothing to help the markets, with the S&P/TSX Index falling 63 points on Friday.

The Cannabis Stock Index

Overseen by 420 Investor, The Cannabis Stock Index is a snapshot of the medical and recreational markets which is rebalanced quarterly. Following Thursday’s dip to 156.12 the Index rebounded on Friday, climbing to 165.72. It was a gain of over 9 points, representing a 6.15 percent increase. Returns on the Index for the year stand at 16.6 percent.

Solactive North American Medical Marijuana Index

Following the same pattern today, Solactive’s North American Medical Marijuana Index rallied today on assurances from company CEO’s and a brighter outlook from Canadian companies. The Index, which closed at 1787.98 on Thursday, from a high of 1962.69 the day before, climbed to 1854.78 on Friday.

Solactive North American Medical Marijuana Index 1/5/2018 Source:Solactive.com

The North American Marijuana Index

It was a banner day for MJIC’s North American Marijuana Index, as the cannabis industry pared its losses from Thursday and appeared to claw its way back up. Before the new year, the Index saw record gains on both sides of the U.S.-Canadian border, as the opening of California’s recreational market sent prices skyrocketing. It all came to a crashing halt on Thursday, however, upon news of the Justice Department’s policy reversal. Friday saw investors jumping back into the game, though, as the Index made significant gains. The North American Marijuana Index climbed to 332.18, up 27.40 points for an 8.99 percent gain. Surprisingly, some of the most sizeable gains were made by US companies, with The United States Marijuana Index gaining 9.40 points, to rise 11.30 percent. It closed the day at 92.59. Canadian stocks were right behind, closing out the week at 954.85, up 65.00 points for a 7.30 percent gain.

Horizon ETF (HMMJ)

Moving away from the indices and looking at the significant funds available on the market today, the  Horizon’s Marijuana Life Sciences Index ETF rebounded slightly following Thursday’s dramatic fall. The fund closed at $22.11, up $0.80 over yesterday for a 3.75 percent gain.

MJX vs. HMMJ 1/5/2018 Source: Bloomberg.com

ETFMG Alternative Harvest ETF (MJX)

Cannabis’ favorite fund, the ETFMG Alternative Harvest ETF (MJX) rallied as well on Friday. The fund made headlines before the Sessions announcement when investor excitement peaked at the news of the funds’ $164-million in net assets, but that quickly abated on Thursday with the announcement from the Justice Department. At the close of trading on Friday the fund hit $36.45, up $0.98 for a 2.76 percent gain.

Winners and Losers

Contrary to yesterday, the market was full of winners on Friday, with Newstrike Resources Ltd. (HIP:CA) leading the pack. The company announced today that its subsidiary Up Cannabis received approval from Health Canada to amend its license and saw share prices rise 39.81 percent on higher than average volume trading. Newstrike closed the day at $1.510 per share. Surna Inc. (SRNA) had a big day on the market, closing out at $0.244 on higher than average volume trading. The company gained $0.046, for a 23.23 percent rise in share prices. MCIG Inc. (MCIG) bounced back on Friday, climbing up $0.050 per share for a 20.84 percent gain. The company closed the day at $0.292 per share.

1/5/2018 Source:Bloomberg.com

On the other side of the market, the losses were minimal, with Cannabis Sativa Inc. (CBDS) closing out at $6.930, only losing $0.470 per share on higher than average volume trading. The company lost 6.35 percent per share on Friday. Axim Biotechnologies Inc. (AXIM) who announced yesterday they would attend the Biotech Showcase in San Francisco, fell $0.200 on higher than average volume trading, a 2.53 percent loss. The company closed the day at $7.700. Finally, Cannabis Wheaton Income Corp. (CBW:CA) fell $0.050 per share, a decline of 1.94 percent. The company closed the day at $2.530.

Stocks to Watch (And Watch Out For)

iAnthus (CSE:IAN) (CNSX:IAN) put out a forceful statement responding to the Justice Department on Thursday. Stock prices rose 12 percent on Friday to close the day $3.16.

Indoor Harvest Corp. (OTCQB:INQD), on the other hand, said they support the Justice Department, hoping the announcement pressures Congress towards legislative action. The company broke even on Friday, closing out the day at $0.26.

For more on The Marijuana Index, including methodology go to marijuanaindex.com. For more on The Cannabis Stock Index, go to www.newcannabisventures.com/cannabis-stock-index/. For more on Solactive’s North American Medical Marijuana Index, go to solactive.com. For more on Horizon’s Marijuana Life Sciences Marijuana Index ETF, go to horizonsetfs.com/hmmj. For more on the ETFMG Alternative Harvest ETF (MJX) go to http://www.mjxetf.com/.

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