Marijuana Stocks Tumble, Then Bounce Back After Sessions Announcement

marijuana stocks sessions announcement
Banks, especially after U.S. federal clampdown on legal marijuana in early January, have shied away from dealing with cannabis businesses, fearing legal consequences.

The sessions announcement did enough to send shivers through the North American cannabis industry. But Marijuana stocks recovered after the initial hit.

With federal intervention looming overhead, investors in marijuana stocks are not shying away from potential profits. After the Sessions announcement, which has ended an Obama-era policy, marijuana stocks in the U.S. and Canada briefly fell. But one day after Sessions waged his war, the U.S. industry had made up half of its losses. Canadian shares, on the other hand, closed at record highs.

According to Marijuana Business Daily,

“By Thursday’s close of trading, the U.S. Marijuana Index and the Canadian Marijuana Index had fallen by 22% and 6%, respectively, from Wednesday’s close. By Friday, both indices had recuperated some – if not all – of their losses, with the U.S. Marijuana Index up 12% and the Canadian Marijuana Index up 7% from Thursday’s close.”

Here is a visual take on the bounce back.

marijuana stocks Sessions Announcement

Investors Believe Rule of Law Will Remain Consistent

The Sessions move puts the power in the hands of prosecutors across 30 states and the District of Columbia. They can decide how aggressively to enforce federal law concerning illegal cannabis.

But the rebound in the numbers suggests that investors believe state laws will remain rule of law. Until the first real federal crackdown on the industry, it will be hard to determine which states will come under siege. However, many industry experts dismiss the idea of a “widespread industry crackdown.” They believe federal officials will go after businesses that openly break state laws or engage in global trafficking.

The instability south of the border has also placed more value in Canadian marijuana markets. Marijuana Business Daily has this to say about Canadian marijuana businesses.

  • “In general, 2017 was a banner year for publicly traded marijuana companies in Canada. Driven by the country’s plans to legalize recreational marijuana this year, the Canadian Marijuana Index rose 153% over the course of 2017. By comparison, the U.S. Marijuana Index rose a relatively modest 19%.”
  • “Canadian marijuana businesses may benefit from the uncertainty created by Sessions’ decision to tear up Obama-era protections, given that more capital could flow into that country’s fully legalized and regulated industry.”
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