Is The Cannabis Trade Burnt?

Right as markets closed last week, the newswires had a flash crash. And just for an instant, a headline came through the wires that wasn’t tainted by Russia. No, this headline was original, home-grown American. Attorney General Sessions announced his own war, the War on Drugs 3.0. And the focus of the war will be cannabis.

Cannabis plantCannabis stocks have become a new trend in the market as over 8 states and the District of Colombia either approve of medical marijuana or recreational use straight out. And as such markets have responded with companies transacting goods and raising funds to the tune of millions of dollars. The Obama administration rightfully acknowledged the profit and commercial potential in the drug. Though President Obama never went so far as to legalize marijuana, it can be argued that he liberalized it. And yet here we are over 100 days into a new presidency and Sessions reminds the world that he needs to save us from ourselves.

Unfortunately, there’s little a company (public or private) can do about the federal government enforcing its own laws. Strict enforcement could seriously hamper investment in the budding cannabis sector. The regulatory risk inherent in a cannabis trade right now is sky high in a trump administration. Investors may need to wait 4 years until a science-friendly administration steps back into the Oval Office.

Despite the many opportunities to invest in cannabis companies, now may be too early to invest. Remember that in trading being too early is just as painful as outright loosing money. However, if you have the appropriate timeframe and investor mindset, the market may actually smell like opportunity.

cree weekly chart

canopy daily chart

msrt weekly chart

 

More to read: States Keep Saying Yes to Marijuana Use. Now Comes the Federal No. (The New York Times)

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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