What's going on?
Canadian cannabis company Tilray’s stock rose by almost 50% on Wednesday (it’s tripled in value in September). The medical-marijuana maker is now worth more than American Airlines and CBS Group, making some investors paranoid.
What does this mean?
On Tuesday, the US Drug Enforcement Administration gave Tilray permission to export its cannabis to the US for use in medical research. Tilray’s now testing its products for medical applications in four countries – potentially encroaching on Big Pharma’s turf, which is worth around $450 billion a year in the US alone. It also has its eye on cannabis-infused consumer products.
Tilray only “went public” in June, and its stock is up 1,000% since then. Cannabis sales in North America were $9 billion in 2017, and forecast to be $47 billion by 2027 (tweet this).
Why should I care?
For markets: Is weed the new crypto?
Marijuana stocks have gotten high as kites in recent weeks, stoked by news of Coca-Cola’s interest in partnering with Aurora Cannabis over infused drinks – and Constellation Brands (owner of Corona beer) raising its stake in Canopy Growth last month. Investors have called Tilray’s stock rally “beyond comprehension”. The value of its shares is currently over $20 billion, even though it only made about $20 million in sales last year.
The bigger picture: The next big thing.
Consumer trends are set firmly toward health, with soda consumption down and people handing in their cigarettes for vapes (cannabis can be vaped, too). Some millennials prefer to spend their money on experiences – like going out to a bar with their friends – rather than material things. Maybe weed will be a (potentially healthier) alternative to alcohol for some. Between pharmaceuticals, beer, cola, and everything else, weed’s got its fingers in a fair few pies.