Organigram Stock On The Rise With Renewed Talk Of Decriminalization In U.S.
MONCTON – It appears speculation over the cannabis industry opening up in the United States sent stock prices soaring for producers this week, including Moncton-based Organigram.
Organigram stock peaked on Wednesday at $8 per share. It dropped on Thursday but to $4.51 per share with a market cap of more than $1-billion, but the stock still traded at a much higher price than the 52-week low of $1.35.
According to Matthieu Roy, VP of Louisbourg Investments in Moncton, the Biden presidency, with renewed talk of at least decriminalizing the use of cannabis at the federal level, has caused renewed hope south of the border. Right now, all 50 states have varying laws around cannabis legalization, unlike Canada where it’s legal in every province and territory.
“You’re having what happened in Canada happen in a larger market with Biden as President,” said Roy. “You’re starting to see cannabis become a market in the USA…what happened with Organigram is widespread across all cannabis companies yesterday, but also over the past week.”
“Even in the Trump presidency, some of the states had already moved to legalize…but just, in general, the Biden administration has been a lot more comfortable with the whole thing. So, the market is assuming that legalization is going to become more widespread.”
It is strange, however, that Wednesday became the day for wild speculation on cannabis in the United States.
Right now, federal politics is focused entirely on Trump’s impeachment trial. But Roy believes what’s happening with weed stocks is similar to the recent Gamestop phenomenon, where Reddit users got together collectively to invest in one industry and send the stock prices soaring.
“What I can read and gather, there’s now a focus from some of those Reddit investors are now pushing those cannabis companies,” said Roy.
To top things off, Roy says the market has a lot of “risk-seeking” investors right now that are creating these bubbles.
“You’re seeing a lot of risk-seeking in cannabis, but also in other sectors… like alternative energy,” said Roy.
“It’s a risk-seeking market right now; sentiment is very positive in equity markets.”
Roy predicts that this large bubble will soon burst, but he can’t predict when it will happen. It’s never easy to make such predictions when dealing with market speculation.
“This falls into the sphere of speculation. It is a mini-speculative bubble. Sometimes, speculation can lead to fundamentals, but often times it doesn’t. The trick is, it’s difficult to know when that bubble will burst.”
“I think they’re going to come back to earth, but it’s really difficult to say if it happens now or several weeks from now.”
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