CRON

Cannabis Stocks Momentum: Four cannabis stocks—Tilray Brands, Cronos Group, Organigram Global, and SNDL—are showing strong technical momentum despite new regulatory challenges from Congress that could impact the hemp-derived THC market.

Legislative Impact: A provision in a recent government funding bill threatens to re-criminalize many hemp-derived products, which could significantly disrupt the market and affect companies like Tilray that rely on these products for U.S. market entry.

Stock Performance Overview: The stocks have varying momentum rankings and performance metrics, with Tilray showing a strong long-term trend but weaker short-term performance, while SNDL has moderate growth despite overall weaker trends.

Industry Implications: The new legislation may benefit multi-state operators by reducing gray-market competition, but it poses risks for Canadian companies, particularly those like Tilray that are looking to expand into the U.S. market.

Trump's Potential Shift on Cannabis: President Trump may be considering a more permissive stance on cannabis, particularly regarding Medicare coverage for CBD, which has sparked optimism among investors in the cannabis industry.

Impact on Cannabis Stocks: Following Trump's video promoting CBD, cannabis stocks like Tilray, Aurora Cannabis, and Canopy Growth experienced significant intraday spikes, although they later returned to pre-Trump levels.

Regulatory Changes for Hemp: There is speculation that updates to the 2018 Farm Bill, which legalized hemp, may be forthcoming, potentially establishing federal standards for safety, testing, and labeling, which could benefit the industry.

Optimism Amid Challenges: Despite ongoing challenges, industry leaders express optimism that clearer regulations could lead to significant growth in the cannabis sector, with many believing that the next administration's policies will be crucial for the industry's future.

Management Performance: Cronos Group reported a record Q3 2025, with strong demand in key markets, particularly Israel, and significant growth in their Spinach brand, which became a leading cannabis brand in Canada. The completion of the GrowCo expansion is expected to alleviate supply constraints and enhance flower sales in 2026.

Financial Results: The company achieved consolidated net revenue of $36.3 million, a 6% increase year-over-year, with a gross margin of 50% and adjusted EBITDA of $5.7 million. They maintain a strong balance sheet with $824 million in cash and no debt, allowing for continued investment in growth.

Outlook and Expectations: Management anticipates improved flower sales in 2026 as the GrowCo expansion ramps up, while international revenue is expected to stabilize in the second half of 2025. They are closely monitoring regulatory changes in key markets like Germany, Switzerland, and Australia.

Analyst Sentiment: Analysts maintained a neutral tone, focusing on operational details such as supply constraints and revenue timing. Management expressed confidence in their strategy and future growth, highlighting the importance of the GrowCo expansion in driving revenue and improving margins.