What Jeff Sessions' Resignation Could Mean For Cannabis Stocks
Investors got some good news Tuesday night, but perhaps none got better news than marijuana stock investors.
In addition to a Democratic House win and legalization measures passing in Michigan and Missouri, the cannabis industry lost one of its biggest opponents in Washington on Wednesday afternoon when Attorney General Jeff Sessions resigned at the request of President Trump.
Sessions, who once famously said “good people don’t smoke marijuana,” has pushed for greater enforcement of the federal ban on marijuana, which directly conflicts with state laws in 33 states.
Market Impact
Sessions’ departure didn’t come as a huge surprise for investors, but Canaccord Genuity analyst Bobby Burleson said it’s a step in the right direction for cannabis stocks nonetheless.
“The response by U.S. cannabis stocks is likely to continue to be positive as the market begins to more seriously contemplate rescheduling of marijuana from Schedule I of the CSA, “ Burleson wrote on Thursday.
However, Cowen analyst Jaret Seiberg said investors should keep their expectations tempered when it comes to potential policy changes in Washington.
“We do not believe the departure of Jeff Sessions will change the regulatory and legal obstacles to banks servicing cannabis companies,” Seiberg said.
Height Capital Markets said the biggest impact of Sessions’ departure will be in states where legal recreational marijuana use was particularly vulnerable to federal enforcement.
“We continue to put odds at 25% that Congress will approve legislation in 2019 to authorize additional marijuana research,” Height wrote.
Not Out Of The Woods
Unfortunately, the rally in cannabis stocks came to an abrupt halt Thursday on concerns that Sessions’ permanent replacement could be as opposed to marijuana legalization as Sessions was. Rumored replacements for Sessions include New Jersey Governor Chris Christie, Florida Attorney General Pam Bondi and former New York mayor and Trump Lawyer Rudy Giuliani, all of which have spoken out against marijuana use in the past.
Here’s a look at how some popular marijuana investments were performing on Thursday:
- ETF MANAGERS TR/TIERRA XP LATIN AME (NYSE: MJ) was down 3.8 percent.
- Canopy Growth Corp (NYSE: CGC) was down 4.4 percent.
- Cronos Group Inc (NASDAQ: CRON) was down 6 percent.
- Tilray Inc (NASDAQ: TLRY) was down 12.5 percent.
- Aurora Cannabis Inc (NYSE: ACB) was down 3.4 percent.
- Aphria Inc (NYSE: APHA) was down 3 percent.
Pyxus International (NYSE: PYX) was down 23 percent.,
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