Marijuana News Today
At the beginning of the Donald Trump administration, there were concerns that a U.S. marijuana crackdown would be in the works due to some of his statements and cabinet selections. Now, those fears are being reignited, as the marijuana news today features a policy squad in the White House bent on derailing marijuana legalization.
As many as 15 federal agencies were reported as having been instructed to cast marijuana legalization in a negative light as more and more states begin to pass pot reform. They were meant to gather the most damning data available and disperse said data as widely as they could. (Source: “Inside The Trump Administration’s Secret War On Weed,” BuzzFeed News, August 29, 2018.)
This is, to put it mildly, an unfortunate development for the marijuana industry, especially after it seemed that the U.S. federal crackdown on marijuana was not going to materialize.
Concerns first arose about the federal government’s intentions with pot when Trump appointed Jeff Sessions as Attorney General. Sessions has a long history of being a marijuana prohibitionist, and with the hefty weight of the Department of Justice behind him and federal laws on the books against marijuana, many believed he would exercise that power with anti-weed actions.
Whether it was through a change of heart in Trump (he released several statements in 2018 supporting states’ rights in regards to marijuana legislation) or due to growing friction between the President and his Attorney General, in either case, strict anti-pot policy never formed, even if Sessions maintained his “drug crusader” rhetoric.
On the flip side, marijuana reform advocates believe that this policy group will prove ineffective. Justin Strekal, Political Director for the National Organization for the Reform of Marijuana Laws, described the White House’s latest efforts to malign legalization as, “the death rattles of marijuana prohibition.”
Strekal added that, “[t]hose who seek to maintain the oppressive policies of cannabis criminalization are grasping at straws in their effort to undo the public policy progresses that have now been enacted in a majority of states, and that are widely supported by voters of both major political parties.” (Source: “The White House Allegedly Has A Marijuana Smear Squad. Cannabis Experts Say Bring It On.,” Forbes, August 30, 2018.)
What This Means for the Marijuana Industry Long-Term
The marijuana news today notwithstanding, there is little hope to prevent the inevitable march toward full legalization in the U.S.
Many of the frontrunners for the Democratic nominee for President in 2020 have already come out in favor of wholesale pot reform.
Beyond that, many states have now legalized marijuana in one form or another, with millions having access to recreational pot every day.
It’s a losing venture to bet against marijuana in the U.S. at this point, but it’s a venture that the White House seems determined to undertake.
The marijuana news today both politically and on the stock market is a downer, as marijuana stocks experience their first week of losses since the Constellation Brands, Inc. (NYSE:STZ) $3.8-billion investment deal sent shares skyrocketing.
Canopy Growth Corp (NYSE:CGC), the target of that huge investment, found itself down about two percent on the week and up about two percent in early-morning trading. The two-percent pullback is hardly anything to lose sleep over, especially considering the company shot up by over 78% on the month.
There is likely to be a negative market reaction at some point to compensate for the massive growth we’ve seen in CGC stock. The question is how severe that pullback will be.
If we see a few weeks of couple-percentage-point losses, that’s hardly going to wipe away the massive gains made by Canopy. Meanwhile, the industry is eagerly awaiting the October 17 legalization date in Canada, which is now just over a month away.
Cronos Group Inc (NASDAQ:CRON), meanwhile, remains one of the hardest marijuana stocks to call.
The company is down about 16% on the week, a rather intense pullback following strong gains through the second half of August. But in early-morning trading today, CRON stock finds itself up about 11%.
Part of the reason for the stock’s dramatic fall has to do with a Citron Research report where short-seller Andrew Left accused the company of intentionally not disclosing the size of distribution agreements with provinces in Canada because they are, “so small they could never justify the premium investors are paying for the stock.” (Source: “Cannabis company Cronos shares’ lose 27 per cent after Citron report,” CTV News, August 30, 2018.)
This helped generate bad buzz surrounding Cronos and led to a sizable pullback this week, but it seems the market is reacting by jumping back in.
CGC & CRON Stock Performances
In the below chart are the recent performances of the stocks for Canopy Growth Corp (black line) and Cronos Group Inc (blue line):
Chart courtesy of StockCharts.com
Despite the marijuana news today seemingly showing otherwise, I believe that the federal government is too late to the party to prevent marijuana legalization from gaining steam.
The majority of the country is for pot reform. Tax revenue, jobs, a decrease of the carceral state, new medications—there’s simply too much sense in pot reform to battle against it now.
White House support or no, it’s now not unreasonable, if optimistic, to expect U.S. marijuana reform within the next four years.