Analysis originally distributed on March 1, 2017 By: Michael Vodicka of Cannabis Stock Trades
The cannabis industry is more sensitive to political news than other industries. With cannabis still in the early stages of global legalization – when politicians make formal or informal comments about the industry – cannabis stocks respond.
That’s what we saw this weekend.
Last Thursday, White House Press Secretary Sean Spicer was asked about the conflict between state and federal cannabis laws.
The cannabis industry has been eagerly awaiting word on how the Trump administration will handle cannabis. Whatever Spicer said was going to be closely analyzed.
He started by drawing a clear line between medical and recreational cannabis – saying the Feds aren’t even legally allowed to go after medical because of a spending rider approved by congress in 2014 and 2015 that prohibits the use of federal funds to go after state medical cannabis.
That was good to hear – it was reassuring that medical cannabis was 100% safe.
Then a smart reporter asked a good follow-up question – “what about state and federal conflicts in recreational?”
Spicer said: “…I do believe that you’ll see greater enforcement of it (cannabis laws).”
That sentence sent ripples through the cannabis industry and media over the weekend.
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It led many to speculate a federal crackdown could be coming – and sent cannabis stocks into the red on Friday.
On Monday, the backlash became so loud that AG Sessions was forced to finally address the issue first hand with reporters.
Sessions first repeated his disapproval of cannabis. Nothing we haven’t heard before.
However, he ended his Q&A by repeating that cannabis is a state issue.
“States, they can pass the laws they choose. I would just say it does remain a violation of federal law to distribute marijuana throughout any place in the United States, whether a state legalizes it or not.”
I view these comments as great news for the cannabis industry.
The cannabis industry has been clamoring for more information on legal cannabis – and we just got about as much as we’re ever going to get.
You are going to see plenty of negative headlines on Sessions and the Feds.
It’s good to stay informed and read other opinions – but understand that 99% of the headlines and content on the web is designed to shock people and get clicks. It’s a bad place to get investment advice.
Cannabis Stocks Generally Weak on the News – Buying Opportunity Could be Coming
Cannabis stocks were having a nice year but the sector took a pretty decent hit last week.
US and Canadian cannabis stocks have been equally weak.
The MJIC North American Cannabis Stock Index is down 11% in the last week, with the MJIC United States Cannabis Stock Index down 11% and the Canadian Cannabis Stock Index down about 10%.
However – for the year, Canadian cannabis stocks are beating their US counterparts.
Canadian Cannabis Index YTD: +17%
Chart courtesy of MarijuanaIndex.com
US Cannabis Index YTD: -9%
Chart courtesy of MarijuanaIndex.com
From this perspective, it’s easy to see how US drug policy is hurting the US cannabis industry, stocks and investors.
This is exactly what I pointed out back in November of 2016 – warning investors to be careful about legal risk and uncertainty in the US. Here’s what I said back on November 1, 2016:
I followed my own advice with Cannabis Stock Trades Premium.
OWCP is one to watch. They are an Israeli company with 8 provisional patent applications filed and IRB studies due out anytime on their proprietary cannabis based psoriasis cream. Safety and efficacy studies are about to be released. They also have sublingual tablets designed for cannabis administration in exact dosages and formulations that can be licensed to other companies for their products. Several other products and studies are being started, including a nasal spray for seizure disorders.
What couple of stocks should we be watching the most?