Is April the Beginning of the Marijuana Stocks Recovery?

marijuana recovery april
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Marijuana Recovery

Marijuana bulls have all been patiently waiting for the industry to get back on track and once again accumulate those impressive gains that market veterans are used to. While 2018 has not been a good year so far for marijuana, a healthy dose of good news filtered through in April, sending marijuana stocks soaring and prompting many to ask whether the marijuana recovery has arrived.

So let’s examine if it really has arrived, or if this is just a blip in the ongoing correction.

First, however, we should cover what generated all this goodwill toward pot stocks.

Many pot stocks leaped in mid-April on the back of a number of positive political tidings coming out of the U.S.

The first had to do with President Donald Trump’s statement that he would respect states’ rights when it came to marijuana legalization.

This was a huge move that put many concerned marijuana investors at ease. For a long time now, Trump had been noncommittal on marijuana, going back and forth on whether he supported states’ rights to regulate the drug as they wished or would use the power of his office to more strictly enforce federal law. The latter scenario would have seen federal agencies divert time and resources into prosecuting marijuana users in states where the drug is legalized.

Not only would that have caused a huge legal showdown as well as angered many state officials, it would certainly have sent marijuana stocks plummeting.

Fortunately, Trump appears to have seen the light and was quoted in a statement as saying that he would respect state laws in regards to marijuana, essentially continuing the status quo set by the Obama administration.

That may not sound like much progress, but considering there were genuine fears of a U.S. marijuana crackdown for over a year now, this is a massive relief.

The second bit of good news came by way of former House Speaker John Boehner. The highly respected Republican flipped his position on marijuana, going from a drug crusader of sorts to joining the advisory board of a cannabis investment company called Acreage Holdings. 

While Boehner no longer serves, he still carries influence within his party and may pave the way for more Republicans to see the light on pot.

Finally, Senate Minority Leader Chuck Schumer is now supporting a marijuana legalization bill (or at least, decriminalization bill), which essentially means that a good portion of Democrats in the Senate will likely fall in line behind him.

This is perhaps the most significant movement of all for marijuana, as the Democrats have a very real opportunity to win the Senate in the 2018 mid-term elections.

Should they be able to achieve a majority, and should Schumer find himself able to rally enough of his party members behind his plan, we could see a  U.S. marijuana legalization bill hit the Senate floor with a legitimate chance to pass before the year’s end.

All these factors have spurred on marijuana growth, but does that mean that the marijuana recovery has arrived?

I’m not quite sold…yet.

The industry is pretty fickle when it comes to responding to headlines, with big gains often followed by equally strong drawbacks once the fervor has dissipated.

Having said that, a marijuana recovery is on the way. I believe it will hit by summer. But should these gains prove sustainable through May, then spring might have brought us an early present.

Analyst Take

It’s still too early to tell if the marijuana recovery has kicked into full swing, but this is a positive first step.

If the gains can hold and companies can avoid any significant falls in the next few weeks, then the marijuana recovery may have officially begun.