Stock market flash: cannabis shakes up Nasdaq and Wall Street

Since the end of August, there has been a massive influx of capital (tens of billions of dollars) into the cannabis industry. Last August, Constellation Brands had legitimized the entire sector by injecting more than $4 billion in Canopy Growth Corporation. Since then, investors have not hesitated, and the stigma surrounding cannabis seems to have disappeared in the stock market sector. This sudden interest from players with enormous financial means has led to rather surprising stock market events.

Tilray is breaking all records

If you follow the news about the markets and cannabis even a little bit, it's impossible that you missed the performance of Tilray. This company, relatively modest in size compared to industry giants, has become, in a matter of weeks, the world's largest in its sector by market capitalization.

This extraordinary performance is mainly due to a combination of technical factors that some traders have happily benefited from. Tilray also took center stage as the Canadian company obtained the first legal import authorization into the USA as part of a research program in partnership with a university.

Only a very small portion of Tilray’s shares is available on the market (just 10% of the total shares). This low liquidity encourages buyers to hold onto their shares, so supply is becoming increasingly scarce while demand rises. Add to that the near-impossibility of shorting Tilray due to prohibitive costs, and you get a stock price that jumps from $20 to $300 in the span of three weeks.

Let's get back to reality and the fundamentals: if you plan to invest in the cannabis stock market but don't know much about it, be very careful with these technical factors because they artificially inflate a company's value. Tilray has already lost more than half its value in three sessions, returning to around $100 per share, and the correction is likely not over.

Aurora and Aphria announce their intention to list in the USA

Doubtless motivated by the success of the successive introductions in the USA of Cronos, Canopy Growth Corporation, and Tilray, the two significant players Aphria and Aurora have announced their intention to list on the New York Stock Exchange (and maybe even before October 17 and the start of legal sales in Canada).

For those wondering what the purpose of being listed in Canada and the US is, the reason is again technical. Being listed on Nasdaq or the NYSE means you become eligible for certain investors (US pension funds, banking institutions) who have restrictions on the types of products they can invest in. For now, if these players want to invest in the cannabis sector, their only choice is among the three companies mentioned above.

Generally, new listings on American exchanges are met with stock price increases, and those who already own shares in Aurora and Aphria could benefit from these decisions.

Coca-Cola is interested in CBD

More unexpectedly, while all industry specialists are wondering which alcoholic or pharmaceutical group will be the next to form partnerships with cannabis companies, Coca-Cola has surprised everyone confirming I spoke with Aurora for the production of CBD-infused beverages.

Although the outcome of this story is still uncertain, the announcement sent shockwaves through the stock market, given the importance of Coca-Cola, the world's largest non-alcoholic beverage maker. What's more, the fact that such a respected and influential company is taking the plunge by considering investing in the cannabis sector clearly shows that cannabis has gained legitimacy. It's undeniable that the cannabis sector, whether it involves THC, CBD, or even hemp, will be integrated into many everyday products.

Beyond the fact that the Aurora title has flown the coop with this announcement, new companies such as Pepsi-Cola and Lipton are now seen as other potential players and will have to position themselves quite quickly on the issue.