It was an action-packed day in the marijuana news today, with a couple of marijuana stocks (HEXO stock and CRON stock) shooting off in opposite directions, while the New Jersey marijuana legalization effort falters.

We’ll first take a look at what’s happening in the Garden State.

New Jersey marijuana legalization seemed like a sure thing when I last wrote about it. After all, it had the support of the governor, whose party had control of both state houses.

But a break in the ranks among Democrats in New Jersey was enough to derail the bill, which likely does not have the votes to pass. (Source: “After rebuke, top Democrats vow not to give up on marijuana legalization,” Politico, March 25, 2019.)

The good news for marijuana legalization in New Jersey, however, is that the fight is far from over.

Governor Phil Murphy, Senate President Steve Sweeney, and Assembly Speaker Craig Coughlin all came out in support of the bill despite the defeat, vowing to take another swing at legalizing marijuana in New Jersey.

“We’re going to sit down and get to work on figuring out the next steps,” Coughlin said during the press conference in the governor’s office. “We didn’t get a touchdown, but we moved the ball to the one yard line.” (Source: Ibid.)

There are a couple of important takeaways from this legislation that we can apply to legalization as a whole across the U.S.

The primary lesson is that just because Democrats are in control doesn’t necessarily mean that marijuana legalization is a sure thing.

While state politics aren’t always a 100% accurate microcosm of national politics, this is an important showing that it’ll take bipartisan support and jockeying within the Democratic Party itself in order to pass important marijuana legislation.

In fact, several Republican lawmakers in New Jersey were swayed to the marijuana legalization camp. Even then, the bill still faced defeat.

The other important takeaway is that overly ambitious marijuana bills could also be an impediment to legalization.

In this case, New Jersey marijuana legalization had a few of other laws tagging along with the marijuana legalization bill, including expungement for small possession pot crimes and an expansion of the medical marijuana service in New Jersey.

Obviously, the more specific and focused a bill is, the less likely it is to face opposition. Tough-on-crime politicians, for instance, may support marijuana legalization but push back on the expungement. Even if I do agree with all aspects of the law, trying to do too much too fast is only going to slow the process as a whole.

So while New Jersey marijuana legalization is still quite likely, the recent defeat did give us a few important reminders worth considering.

State legalization is a huge part of the overall fight for national marijuana legalization in the United States The closer we get to that threshold, the closer we get to another marijuana explosion in which stock prices will likely soar.

HEXO Stock

Speaking of soaring stocks, Hexo Corp (NYSEAMERICAN:HEXO) was up big to start the day after more analysts came out to say what I’ve been writing in these columns for months now: HEXO stock is undervalued.

The HEXO share price climbed over five percent in early-morning trading today but is down nearly six percent over the past five days.

Hexo was the beneficiary of entering yet another province in Canada, with Up Cannabis Inc., a wholly owned subsidiary of the recently acquired Newstrike Brands Ltd (OGRMF:NWKRF, CVE:HIP), announcing yesterday that it had entered into a supply agreement with New Brunswick.

New Brunswick is a relatively small province on the grand scale of things, but it is another victory for HEXO stock, as seen in the stock surge.

Furthermore, this places Hexo in the enviable position of having supply agreements spanning much of Canada, with one of the largest ones in Quebec, Canada’s second-largest province.

Beacon Securities Limited, an investment firm out of Toronto, came out in support of HEXO stock, with an analyst writing that the stock is trading well below its value. (Source: “HEXO is trading at a huge discount to its US peers, Beacon says,” Cantech Letter, March 25, 2019.)

I agree. Hexo continues to impress, and its recent acquisition of Newstrike—and the subsequent increased Canadian footprint and production capacity—has only served to further my bullish sentiment regarding HEXO stock.

CRON Stock

On the opposite end of the market today, we have Cronos Group Inc (NASDAQ:CRON), which, after a weak quarterly report, is down big. CRON stock fell over four percent in early-morning trading today and finds itself down about nine percent over the past five days.

The hit came as the company’s latest earnings report came up short relative to analysts’ expectations.

Cronos reported revenue of CA$5.6 million, well below the consensus estimate of CA$10.8 million and below all analyst expectations.

Analysts surveyed by Bloomberg projected revenue growth of more than 500%, a high mark, but one that was not wholly unreasonable, considering the huge revenue spikes we’ve seen in recent financial reports post-Canadian legalization. The company posted a loss of CA$0.11 per share for fiscal-year 2018. (Source: “Cannabis producer Cronos sinks after revenue comes up short (CRON),” Business Insider, March 26, 2019.)

You know a quarterly report isn’t all that great when the press release doesn’t tout numbers and instead focuses on “corporate milestones,” as the Cronos release did today. (Source: “Cronos Group Inc. Announces Fourth Quarter 2018 and Full Year 2018 Results,” Globe Newswire, March 26, 2019.)

Still, while the numbers were weaker than expected, Cronos stock is still very much in a strong position. The stock, after all, has seen growth of more than 160% over the past year, one of the strongest gains in the legal cannabis industry. Year-to-date, the stock is nearly up 90%.

We’ll have to wait and see if the disappointing numbers have any lasting impact on CRON stock, but I believe that the the stock will bounce back sooner rather than later.

HEXO and CRON Stock Performances

The performances of HEXO stock (black line) and CRON stock (blue line) over the past week are seen on the chart below.

Analyst Take

The marijuana news today was a flurry of activity, with marijuana stocks moving in all directions and the political side throwing us for a whirl.

New Jersey marijuana legalization is facing a stumbling block, but in a heartening move, state politicians have vowed to see a legalization bill passed.

That’s a good sign for marijuana bulls, not to mention a valuable opportunity to remind ourselves that marijuana bills need to be finessed through the legislative bodies around the U.S.; legalization is by no means a forgone conclusion, even with total party control.

On the marijuana stock market, we have a tale of two companies: Hexo, with its strong showing as it expands across Canada, and Cronos, which fell well short of analysts’ expectations in its most recent filing.