A win for weed
While both Democrats and Republicans claimed victory over this weeks’ mid-term elections in the U.S., the marijuana industry’s success is undeniable. The election’s results signaled attitudes toward cannabis are changing across the U.S., a blessing for the cannabis industry.
In post-election trading, Tilray Inc. (NASDAQ: TLRY.O) moved up with the most vigor, with shares trading up over 30 percent.
New Age Beverages Corp (NASDAQ: NBEV), a company that recently announced intentions to expand into cannabis products, shot up 20.1 percent.
The Horizon’s Marijuana ETF (HMMJ.TO) posted a 10.7 percent gain in the two trading days leading up to decision day.
Moreover, in a sign of sustainability, volumes were high as well. Upticks in stock prices are more meaningful if gains ride the backs of big volume, rather than a few shares traded.
Tilray, for example, traded 4 times its 10-day moving average number of shares traded.
What did voters tell shareholders?
Cannabis share prices originally increased in light of successful ballot initiatives that approved marijuana use in many states. Michigan approved recreational marijuana use. It is now the 10th state to support the recreational use of cannabis products.
Meanwhile, Missouri and Utah enacted propositions to legalize medical marijuana use. In an unusual failure for the drug’s acceptance, however, North Dakota voters didn’t approve its use.
Nonetheless, successful state initiatives indicate that U.S. voter sentiment supports marijuana, news that is adding to cannabis industry momentum.
Federal law to loosen?
Under U.S. federal law, Cannabis is still illegal. However, those following the industry believe it won’t be long before that changes.
“There’s a number of major steps to go through for the industry to develop the potential that is there,” said Tom Plumb, portfolio manager at Wisconsin Capital Management in Madison to reporters.
“It’s going to be in the best interest of the government to get handles on this industry.”
Furthermore, actions are afoot that will shield marijuana-related companies from federal prosecution in the U.S. Colorado Republican Senator Cory Gardner and Massachusetts Democrat Senator Elizabeth Warren sponsored a bill to put the legal status of marijuana in states hands.
Trump’s axing of Jeff Sessions gave marijuana stocks a further boost. Sessions is a vocal legalization antagonist. Moreover, as Attorney General, he gave prosecutors directions to strictly enforce federal laws against marijuana in states that decriminalized the drug.
Democratic House could help
The Democratic Party took control of the House of Representatives, which could further lift the industry. The Safe Act intends to allow U.S. banks to work with cannabis companies in compliance with state laws. Also, the Veterans Equal Access Act sets out to allow Department of Veterans Affairs doctors to authorize medical marijuana for patients in legal states.
While this election didn’t include as many marijuana-related ballots as the 2016 one did, the change in the makeup of Congress will set growth expectations high.
For more information on the sector, check out our introduction to cannabis investing.