Marijuana Stocks Are Heating Up The Stock Market Today
We know the exotic nature of certain industries, especially if you’ve become familiar with penny stocks. Some of the unique business models are utilized, ranging from treasure hunting to luxury rail-cars. While those sort of one-off niches may appeal to some, one industry thought to have been a “fad” has actually become a commanding force in the public markets. I’m talking about cannabis.
Legal and medical marijuana has now established itself as a formidable industry. We’ve seen companies raise billions of dollars over the last few years. All of this to create an internationally acclaimed industry appealing to the scientific and consumer segments. While it is still illegal on a federal level in the U.S., Canada was one of the original countries to push forward in favor of sweeping legalization. The one sticking point for investors has been the size of the U.S. vs. the Canadian cannabis markets. To put it simply, the U.S. has a larger addressable market.
Incoming President Biden and Vice President Harris made it well-known they would push for favorable legislation on the topic. The SAFE Banking Act is something that remains in the spotlight in 2021. Furthermore, we’ve also seen Democrats like U.S. Senator Ron Wyden pushing for cannabis legislation to move forward. He recently tweeted out, “We can’t address our country’s racial inequality crisis without ending the outdated, dangerous war on drugs and its disproportionate impact on Black and Brown Americans. @SenSchumer @SenBooker and I are going to introduce legislation to do just that.”
Marijuana Stock News Sparks Momentum In The Market
Aside from the 30,000-foot view on legalization, Wednesday also brought big M&A news that could be a catalyst for some marijuana penny stocks. Jazz Pharmaceuticals (NASDAQ: JAZZ) and GW Pharmaceuticals (NASDAQ: GWPH) announced a merger agreement. Jazz will acquire GW for $220 per ADS in the form of $200 cash and $20 in Jazz stock. The deal is valued at $7.2 billion total.
Since GW is one of the pioneers in cannabis research for epilepsy, this news sent a shockwave across the cannabis industry. Of course, pre-market GW share lifted to more than $200 per share. But something else is that there were many pot stocks and biotech companies with cannabis-based treatments following suit. Will these remain top penny stocks to buy, or should you avoid this speculation-fueled momentum entirely?
Marijuana Penny Stocks To Watch
- Zynerba Pharmaceuticals (NASDAQ: ZYNE)
- Corbus Pharmaceutical Holdings (NASDAQ: CRBP)
- cbdMD Inc (NYSE: YCBD)
- Harvest Health & Recreation (OTC: HRVSF)
There’s no doubt that biotech companies with cannabis in their platforms will be in focus. Whether or not the sympathy sentiment continues fueling momentum will be seen in time. Zynerba Pharmaceuticals hasn’t made many headlines in 2021 so far. However, the recent details of GW’s deal have placed a bright spotlight on the company’s pipeline.
In particular, Zynerba produces transdermal cannabinoid therapies for rare and near-rare neuropsychiatric disorders. Toward the end of the year, the company gave an update to a meeting with the FDA regarding its Fragile X syndrome program. According to the company, it’s planning on a double-blind, placebo-controlled pivotal trial in certain patients with Fragile X.
In the first half of this year, Zynerba plans on reviewing the trial design and protocol for the new trial through a Type C meeting with the FDA. It also expects to initiate the pivotal trial before the end of the year.
Corbus Pharmaceutical Holdings
Corbus is another one of the biotech penny stocks with exposure to cannabis. The company develops drugs targeting the endocannabinoid system. Since the beginning of the year, CRBP shares have been steadily climbing higher as the company has conducted presentations at industry conferences. The most recent was last week at the New York Academy of Sciences’ webinar. In particular, the company discussed the therapeutic potential of targeting cannabinoid type 1 and 2 receptors.
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Corbus currently has pipeline treatments in development. For instance, lenabasum is used for treating systemic sclerosis. The drug utilizes the endocannabinoid system to facilitate the delivery of the drug. Additionally, the company’s other treatments, like CRB-4001, focus on nonalcoholic steatohepatitis. CRB-4001 is undergoing chronic pharmacokinetic studies in primates, with results expected this year, according to Corbus.
While it isn’t necessarily a clinical setting company, cbdMD does focus on the effects of cannabis on the body. In particular, the company sells cannabidiol brands. The product portfolio includes topicals, gummies, bath bombs, tinctures, skincare, and even pet products. The company also has over 100 SKUs of THC-free CBD products produced in the U.S.
While some of the companies on this list are moving in sympathy with GW alone, YCBD may also have a catalyst of its own. This week the company announced that it would donate up to $500,000 from its online sales to The Barstool Fund. So far, Barstool Sports has raised over $30 million and has reached out to more than 150 businesses and counting. Obviously, some goodwill can go a long way. But what traders may also be speculating on is the company’s upcoming earnings. Next week, cbdMD hosts a conference call to discuss its December 31, 2020, first-quarter financial results and business progress.
Harvest Health & Recreation
Finally, more of a “pure-play” pot stock that we’ve come to know. Harvest Health is a multi-state operator expanding retail and wholesale operations in the U.S. Canaccord Genuity recently boosted its price target to $7 and maintained a Buy on the stock. Stifel Nicolaus upgraded its rating on the stock late last year from Hold to Buy.
With the incoming administration and the recent legalization initiatives in Arizona, Harvest has gained a bit more momentum recently. The company registered its first recreational cannabis sales in Arizona last month. Right now, the company operates 15 dispensaries in Arizona. These are in addition to the company’s other California, Florida, North Dakota, and Pennsylvania locations.
Are Marijuana Penny Stocks On Your List Right Now?
There’s no denying that there’s plenty of excitement in the industry right now. With the Biden/Harris Administration in place, hopes are high right now for expedited legalization. When or if that will actually happen is yet to be seen. However, since it’s early in his Presidency, the markets are already speculating on a favorable outcome. The biggest question is, will there be the typical “Ides of March” pullback before that happens?