Jeff Sessions’ retraction of the Cole Memo puts a dent in the future of the American cannabis industry. But his political waves create opportunities for marijuana stock north of the border.
The Obama administration fought hard to let individual U.S. states legalize cannabis without private organizations bearing the risk of federal intervention. Now, the abrasive politics of Jeff Sessions have removed the “safety-net” of the American cannabis industry.
Those actions fueled a massive marijuana stock selloff on January 4th.
According to Forbes, Cannabics Pharmaceuticals, Medical Marijuana, United Cannabis, GreenGro Technologies, MassRoots, and mCig crashed 25% to 30% each. This is after the stocks were soaring as California’s new marijuana laws went into effect.
ETFMG Alternative Harvest ETF fell 6%. Its Canadian counterpart, Horizons Marijuana Life Sciences Index ETF, dropped 8%. It trades over the counter in the U.S. under the ticker HMLSF and HMMJ in Canada.
But American divisiveness could fuel the Canadian marijuana industry moving forward.
Canadian Cannabis in Position to Benefit from American Crackdown
The Sessions crackdown has placed a looming burden over the head of investors. Industry leaders say this will fuel Canadian cannabis in the long run. In fact, marijuana investors are now favoring Canadian companies over U.S. subsidiaries. This is an unexpected consequence for the American industry.
John Arbuthnot, CEO of Delta 9 Cannabis in Winnipeg says there is a fear associated with investing in U.S. based companies. Especially at a time when it is possible for people connected with those companies to be prosecuted under federal drug laws. He goes on to say that,
“There is a demonstrated interest among investors globally to invest in cannabis companies, which is only logical given the rapid growth of this industry.”
Canadian Companies Offer Only Safe Haven
Arbuthnot says that due to U.S. policy, Canadian companies remain the only safe haven for cannabis investors. Cannabis companies in Canada are treated the same as any other business in the country. They have legal access to insurance, tax write-offs, bank loans and more. Due to looming federal laws in the states, they can even expand overseas without the fear of U.S. competition. Arbuthnot says,
“Canada is already, without question, the global leader in the legal cannabis industry, and this is due largely to our own federal government’s support of sensible legalization policy,”