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Marijuana Stock Report: One For You, Nineteen For Me

The North American Marijuana Index plummeted on Monday, as pot stocks fell below 200 points following news of Canada’s plans for an “annual regulatory fee” amounting to 2.3 percent on the gross revenues of the country’s biggest Licensed Producers. Industry insiders worry that the additional $100 million in taxes could curtail efforts to compete with illegal black market marijuana sales. The news sent stock prices tumbling on both sides of the U.S.-Canadian border, with the Index falling 7.49 points, or 3.64 percent, to close out the day at 198.10.

The United States Marijuana Index fell nearly 3.0 percent in trading on Monday, with the Canadian Index dropping a whopping 27.96 points, or 4.73 percent, due mostly to the fallout from the tax news announced by Health Canada.

Cannabis companies have 30 days to comment on the tax plan, according to The Globe and Mail, which would be in addition to the already $1 per gram excise tax on marijuana announced earlier this year.

Allan Rewak, Executive Director of the Cannabis Canada Council, noted that most companies already signed supply deals that have not factored in the additional cost. “I fear that this will cause larger licensed producers with multiple sites to allocate all medical production and sales to a specific site, which may, as a result, reduce the strain and product selection available to medical patients,” he told The Globe and Mail.

So far, only larger Licensed Producers would have to pay the 2.3 percent fee, with smaller companies being asked to pay a one percent tax for the same purpose.

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Meanwhile, Wall Street saw a mixed day as investors were sent reeling following a less than stellar earnings report from Netflix. The company saw share prices drop nearly 14 percent before picking up and ending the day up 1.2 percent. In fact, oil and tech stocks disappointed throughout the day.

After hours trading was a bit bearish following President Trump’s stunning meeting with Russian President Vladimir Putin, which left critics on both sides of the aisle criticizing his performance, along with his overall loyalties. Facebook, Google, and Amazon were all down over one percent in after-hours trading.

"For the FANG stocks, it will be a tough day," said Peter Boockvar, chief investment officer at Bleakley Financial Group in an interview with CNBC. "They were the poster boys for outperformance, and when you get outperformers like these guys, that drives up valuations. When the valuations are this high, there is no room for error."

The Dow Jones Industrial Average rose 44.95 points, or 0.18 percent, to end the day at 25,064.36, while the S&P 500 dropped 2.88 points, or 0.10 percent, to close out the day at 2,798.43. The Nasdaq Composite dropped 20.26 points, or 0.26 percent, to finish Monday at 7,805.72.

The Horizons Marijuana Life Sciences ETF (HMMJ.TO) fell CAD$0.87 per share, or 4.85 percent, while the Evolve Marijuana ETF fell CAD$0.86 per share, or 5.18 percent, closing out the day at CAD$15.75.

Aurora Cannabis Chooses Shopify

Making a point is Aurora Cannabis Inc. (TSX:ACB) who announced on Monday that e-commerce and point-of-sale giant Shopify would be their chosen platform for retail cannabis sales. The two companies will work together to transition Aurora away from their current system so that both medical marijuana and recreational cannabis consumers will be able to have what is being called an “improved customer experience.” Aurora hopes to use the platform to help in both their domestic and international expansion plans.

"Selecting Shopify allows Aurora to bring a world-class e-commerce solution to our patients and future adult consumer use customers," said Darryl Vleeming, CIO of Aurora Cannabis Inc. in a statement released Monday. "Shopify's unique, industry-leading platform provides a safe, secure and flexible e-commerce site that we can build on as we execute our global growth initiatives and enter new markets."

Quick Hits

Tetra Bio-Pharma Inc. (TSX VENTURE:TBP) (OTCQB:TBPMF) is going after the fibromyalgia market… The Hydropothecary Corporation (TSX:HEXO) introduced Fleur de Lune, an intimate medical cannabis oil… Khiron Life Sciences (TSX-V:KHRN) halted trading today, at their request.

Crack Down in Cannabis Banking

According to New Frontier Data, the number of banks dealing with the cannabis industry increased by 29 percent recently. However, because those banks are required to file reports with FinCEN of suspicious activity, the number of reports has increased as well. The data can be seen in this week’s Cannabit:

Courtesy New Frontier Data (www.newfrontierdata.com)
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