Aphria Inc (TSE:APH), Cannabis Sector Rally “Yuge” On Donald Trump Support

Benjamin A. Smith
|

For Aphria Inc (TSE:APH) (OTCMKTS:APHQF) (FRA:10E) and the rest of the cannabis sector, Donald Trump may not be such a bad guy after all. After yawning through the session on a continuation of lackluster volume, cannabis stocks exploded on positive news down south. We explore this news and provide an updated technical take for both sector co-leaders.

The calatyzing event is undoubtedly the news that president Trump has promised a leading Senate Republican that he will support congressional efforts to protect states that have legalized marijuana. This seemingly removes a huge unknown for the market, as U.S. Attorney General Jeff Sessions was a known opponent of such interdiction.

Previously, Midas Letter wrote about how Jeff Sessions was playing a losing hand by rescinding the Cole Memo. Turns out, this perception was spot-on.

Throughout his time as presidential hopeful and in-office, Trump has consistently held contrasting opinions with Sessions on the issue of legalization. During the presidential campaign, Trump told a local Colorado television station affiliate that “it’s up to the states” on the marijuana issue:

In the nascent stages of his presidential campaign on October 30, 2015, Trump told the press corp at the Nugget Convention Center in Sparks, Nevada, that, as far as legalizing pot goes, “I really believe we should leave it up to the states.”

With his notable silence on the issue since becoming president, today’s news is a natural extension of his existing believes. Why else would he leave his hand-picked Attorney General twisting in the wind on this matter? Also consider that a plurality of the American public—including conservative for the first time—believe cannabis should be legalized. Trump never had any reason, neither ideological nor political, to contravene existing beliefs.

It’s worth noting that cannabis remains classified as Scheduled I narcotic. On the federal level, nothing changes from an illegality standpoint.

But with Trump throwing support behind the states, the chances of federal intervention against licensed producers, retailer, manufacturers and distributors becomes greatly diminished. The question now is whether neglect of federal marijuana criminal statutes—backed by the president—is enough to persuade Canopy Growth, Aphria and others to pursue more aggressive initiatives down south.

CannaRoyalty Corp. CEO Marc Lustig talks to James about recent events that could affect the industry, including Jeff Sessions’ rescinding the Cole Memo and Health Canada’s announcement to triple the amount of licensed producers

While Trump’s maneuver is an important step in the right direction, federal de-criminalization and de-scheduling as a Schedule I narcotic would make even greater impact.

Aphria Technical Take

Technically speaking, today’s rally wasn’t simply a one-off event. With a strong close above the 200-Day moving average on strong volume, Aphria has repaired some deep technical damage suffered over the past couple of months.

On Aphria’s ascent, prices cut through the ‘200’ like swiss cheese, barely giving even slight pause. Prices blasted up to a $12.03 print, which was roughly the bottom of the February lows.

From here, it’s tough to gauge where price action goes next. Aphria announces earnings next Monday morning, so earnings details will decide when prices consolidate or experience continuation. Either way, it was a strong finish to the week, as cannabis technicals across the board continue to undo the trauma.

And here is how Aphria acted in the wake of The Washington Post news story. This chart—more or less—was reciprocated to direct rivals Canopy Growth and Aurora Cannabis during this catalyzing event.

Benjamin A. Smith

Benjamin A. Smith

Ben is a research analyst and capital markets professional with nearly 20 years of experience. His areas of expertise are broad-based, and include extensive knowledge of macro economics, stock/derivative trading, commodity complexes, cryptocurrencies and technical/quant analysis. He also maintains an particular affinity for U.S. politics and the macro-regulatory environment facing...
More Info...

[email protected] |

Midas Letter is provided as a source of information only, and is in no way to be construed as investment advice. James West, the author and publisher of the Midas Letter, is not authorized to provide investor advice, and provides this information only to readers who are interested in knowing what he is investing in and how he reaches such decisions.

Investing in emerging public companies involves a high degree of risk and investors in such companies could lose all their money. Always consult a duly accredited investment professional in your jurisdiction prior to making any investment decision.

Midas Letter occasionally accepts fees for advertising and sponsorship from public companies featured on this site. James West and/or Midas Letter may also receive compensation from companies affiliated with companies featured on this site. James West and/or Midas Letter also invests in companies on this site and so readers should view all information on this site as biased.

Free Newsletter,
Priceless Content.

Get more of Midas Letter delivered right to your inbox.

Special Offer

Sign-up today and receive free and immediate access to three recently published special reports!