2 Cannabis stocks rebound as Germany embraces legalization

Cannabis stocks have been a bubble burst in 2021. The hype associated with states anxious about cannabis legalization and hopes for federal repeal of marijuana legislation has lost momentum, but it could start again. Germany just passed a monumental bill that will legalize cannabis on April 1, 2024.

Cannabis stocks were slowly rising under the radar until the news hit on March 22, 2024, sending them soaring. The US Health and Human Services (HHS) recommended that the DEA reclassify cannabis from a Schedule I drug to a Schedule III drug in January 2024. Basically, pushing it from the list to a misdemeanor.

The U.S. cannabis industry is expected to reach $40 billion in 2024, as 79% of Americans now live in a county with at least one dispensary. Here are 2 medical cannabis stocks that were not approved for direct sales in the US but are still making a comeback in 2024.

Crown growth

Canopy Growth Co. NASDAQ: CGC is a manufacturer and distributor of cannabis for recreational and medical use along with hemp-based products. Based in Canada, it derives the majority of its revenues from the Canadian cannabis market. It sells products under various brand names, including Tweed, Doja, Deep Space, Ace Valley, 7 Acres, vert, Twd, wana, Hi Way and through Martha Stewart CBD Products in the United States. It also opens international brands Spectrum Therapeutics and Storz & Beckel.

Approval of cannabis in Germany

On April 1, 2024, cannabis will be legalized in Germany. Cannabis will no longer be recognized as a narcotic. This will allow adult German customers to legally consume cannabis for recreational and medical use. Canopy Growth issued a press release celebrating the move to legalization. It intends to expand its presence in the country through its Storz & Bickel vaporizer brand and in the medical sector through its Canopy Medical division. Canopy Growth plans to become one of the top three players in the German cannabis market.

Storz & Bickel CEO Jurgen Bickel commented: “This legislation represents a very important and long overdue step to end the criminalization of cannabis in Germany and sets an important example for the whole of Europe.” Bickel continued: “With more than 20 years working in the cannabis industry, consistently advocating for legalization in Germany,

I am proud that consumers will now have a safe and legal environment for cannabis consumption and that Storz & Bickel will be there to provide the highest quality vaping devices from a proud German brand.”

It turns green but bleeds red

On February 9, 2024, Canopy Growth reported fiscal third-quarter 2023 EPS loss of $1.63, missing analysts’ estimates of $1.28. Revenue fell 11% year over year to $66.92 million. Consolidated gross margins reached 36% in the quarter. The company has $186 million in cash and reduced overall debt by $69 million in the fiscal third quarter of 2024.

Canopy Growth CEO David Klein commented: “This is the dawn of a new era for Canopy Growth. We are singularly focused on cannabis and are demonstrating growth across all of our business units. With our Canopy USA strategy that now moving forward, we expect to be the first and only publicly traded company in the United States offering shareholders a unique opportunity to gain exposure to the fastest growing cannabis market in the world.”

Help marijuana dispensaries

Senate Majority Leader Chuck Schumer is trying to pass the SAFER Banking Act, which aims to provide marijuana entrepreneurs access to banking services. For now, most cannabis dispensaries in the United States deal with cash only. Schumer is a supporter of federal cannabis legalization. Vice President Kamala Harris urged the DEA to reclassify cannabis as a Schedule III drug.

Crown growth analyst recommendations and price targets can be found on MarketBeat. Canopy Growth’s peers and competitors can be found at MarketBeat Stock Screener.

Daily mug template

The daily candlestick chart on CGC illustrates a cup pattern. The cup lip line formed at a high of $8.35 on December 11, 2021, while the stock fell to a low of $2.77 on March 15, 2024. CGC stock has since risen, trending towards the cup lip line, gaining 68.64% to $7.99 in March. 22, 2024, when the cannabis legalization bill cleared its final hurdle.

On April 1, 2024, Germany legalizes cannabis, allowing consumers to carry up to 25 grams of cannabis in public and up to 50 grams in private. The daily relative strength index rises to the oversold 86 band. The pullback support levels are at $22.57, $21.63, $21.06, and $20.51.

Tilray

Tilray Inc. NASDAQ: TLRY made its IPO debut in 2018, reaching astronomical highs of $214.06 on September 19, 2018. It has been on a deadly decline ever since, selling off on every rebound for years, hitting a low of $1.50 on June 20, 2023 Cannabis legalization in Germany increased by 18%.

Tilray is another Canadian cannabis manufacturer that offers recreational and medical products. It claims to have the number 1 market share in Canada and is a leader in medical cannabis in Europe. The company believes that legalization in Germany should accelerate momentum towards continued legalization across Europe.

Abolition of the cultivation process in the country

Tilray has one of only 3 cannabis cultivation centers in the country. The German law on medical cannabis provides for the abolition of the tendering procedure for the domestic cultivation of medical cannabis. This will allow Tilray to increase its cannabis production by 500% to more than double its revenue opportunities. Tilray Pharma is the distribution subsidiary that distributes medical cannabis to 13,000 pharmacies, wholesalers and distributors in Germany. Obtain AI-powered insights on MarketBeat.

Improve the fundamentals

Tilray reported a fiscal loss of 6 cents per share per share in the second quarter of 2024, missing analysts’ estimates by a cent. Revenue rose 34.6% to $194 million, beating consensus estimates of $193.67 million. Net cannabis revenues increased 35% to $67 million, compared to $50 million in the same period a year ago.

Net revenues from alcoholic beverages grew by 117% to 47 million. Net distribution revenue increased 12% to $67 million. Net loss fell to $46 million from $62 million in the year-ago period. Tilray is on track to become one of the top 12 craft beer makers in the United States.

Insiders buying shares

On January 16, 2024, Tilray’s CEO, CFO and General Counsel purchased 79,100 shares at between $1.87 and $1.88 worth of stock worth approximately $148,000. Tilray reiterates its adjusted EBITDA target of $68 million to $78 million, representing growth of 11% to 27%. The company expects to continue generating positive cash flows.

Portugal revolutionizes medical cannabis

On March 11, 2024, Tilray Medical received approval for its first medical cannabis extract from its Tilray THC 18 whole flower called Tilray Oral Solution THC 5 CBD 20 in Portugal. This historic approval allows Tilray to launch medical cannabis extract in late spring 2024. The approved extract is a bellwether for use in many critical areas of patient care.

CEO Insights

Tilray CEO Irwin Simon commented: “We have grown revenues, improved our capital structure and realized operational synergies, while strengthening Tilray Brands’ position as the #1 cannabis company and portfolio of brands in Canada by sales volume and market share, European market leader in the medical sector.” cannabis and a leader in hemp-based branded products.

Simon continued, “We have also emerged as a disruptor in the craft alcoholic beverage industry by assembling a portfolio of highly sought-after brands that dominate key U.S. regions in the Northeast, Pacific Northwest and Southeast. Tilray is now uniquely positioned to become one of the top 12 beer and alcoholic beverage companies in the United States.”

Tilray analyst ratings and price targets I’m on MarketBeat.

Daily candlestick with flagpole

The daily candlestick chart on TLRY illustrates the parabolic rally from the low of $1.50 to $2.37 on March 22, 2023. The daily RSI rose to the 74 band. This is the flagpole construction.

The formation of a bullish flag or pennant depends on what happens to the stock price action in the next few days leading up to German legalization on April 1, 2024. Pullback support levels are at $1.93, $ 1.75, $1.60 and $1.50.

Before you consider Canopy Growth, you’ll want to hear this.

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