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What Makes Marijuana ETF the Best Performer in January?

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Marijuana stocks and the related ETF has have been on a high in 2018, courtesy of a massive rally in mid-2018 on Canada’s pending legalization of recreational marijuana starting Oct 17. 

However, after taking a beating in the final quarter of 2018, pot stocks made a comeback at the start of this year on positive industry-specific news and renewed risk appetite. The pure-play marijuana ETF ETFMG Alternative Harvest ETF (MJ - Free Report) has gained 35.5% in the past month (as of Jan 28, 2019) (read: After a Landmark 2018, Will Pot ETF See Same High in 2019?).

Inside the Driving Factors of 2019

First, the stock of pot-producer Tilray Inc. (TLRY - Free Report) jumped in mid-January, after a private-equity firm, which is the company’s controlling stockholder, affirmed that it won’t sell shares when Tilray’s IPO lockup expires on Jan 15. Also, several research houses have shown positive response in pot stocks of late (read: Why Marijuana ETF is on a High in 2019).

Also, there news that Canadian marijuana producer Aurora Cannabis Inc. (ACB - Free Report) is acquiring British Columbia-based Whistler Medical Marijuana for about $132 million. Canopy Growth was also given New York State hemp license.

Notably, Cannabis is getting official approval from many U.S. states for recreational uses, apart from medical usage. Though pot remains entirely illegal at the federal level, Michigan approved a ballot measure in early November for recreational use of marijuana to become the 10th such U.S. State while Missouri and Utah saw legalization of medical marijuana, taking the total number of U.S. states greenlighting medical pot to 32.

If this was not enough, Chief Executive of Organigram Holdings Inc. indicated that he expects sales to double in the first full quarter of legal marijuana sales in Canada. The cannabis producer Organigram Holdings Inc. noted that net revenue in its latest quarter was $12.4 million, up from $2.4 million a year earlier on the launch of recreational pot sales in October.

Organigram’s strong results acted as a cornerstone and boosted most of the key players of the cannabis industry. The fund MJ was up 5.6% on Jan 28, thanks to the news. Canopy Growth Corporation (CGC - Free Report) added about 4.7%, Cronos Group Inc. (CRON - Free Report) jumped 15.4%, Tilary rose 8.7% and Aurora Cannabis gained 5.7% on Jan 28.

Gains to Come From Medicine & Beverage Industry?

U.S. drug regulators approved the first marijuana-based pharmaceutical to treat kids with a form of epilepsy, while the markets have been eyed by beverage companies to produce cannabis-induced beverage. 

There were tie-ups between Constellation Brands (STZ - Free Report) and Canopy Growth, Canadian arm of Molson Coors and Quebec-based pot producer Hydropothecary Corp. to make such beverages. Diageo Plc (DEO - Free Report)  and Coca Cola (KO - Free Report)  have also been eyeing the industry. One industry analyst projects the cannabis beverage market to reach a worth of $600 million by 2022 (read: 4 Reasons Why Pot Stocks & ETF Could Be on a High in 2019).

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