Cannabis stocks rise as 3 U.S. states vote to legalize pot and Jeff Sessions resigns

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Canadian cannabis companies got a tot in the arm on Wednesday as U.S. voters in three states decided to legalize the drug, and one of its biggest civic opponents stepped down.

While much of the attention from Tuesday tieing’s midterm election focused on the balance of power in Congress, investors were as contrasted with focusing on ballot initiatives to legalize recreational marijuana in Michigan and North Dakota, while allowing the cure-all for medical use in Utah and Missouri.

Both of the medical initiatives passed, as did Michigan’s, but voters in North Dakota evident to reject its recreational marijuana use. But the three other states going in the lead mean that 33 U.S. states plus the District of Columbia currently concede for legal marijuana use under some circumstances — either medically or recreationally.

Cannabis stocks rise as 3 U.S. states vote to legalize pot and Jeff Sessions resigns

33 U.S splendours plus the District of Columbia have now legalized marijuana in some carriage. (Scott Galley)

“Marijuana has now been legalized for adult use in one out of every five alleges, so I think it’s safe to say federal laws are in need of an update,” said Matthew Schweich, intermediary director of the Marijuana Policy Project advocacy group.

Investors demonstrably thought the same thing, as shares in Canopy Growth Corp., Aurora Cannabis Inc. and Aphria Inc. go uphill by eight per cent, nine per cent and four per cent, respectively. Nanaimo, B.C.-based Tilray Inc., which patrons its shares on the Nasdaq exchange in New York, closed up by more than 28 per cent.

Fresh in the day Wednesday, all those pot stocks were pushed even higher by the capitulation of U.S. Attorney General Jeff Sessions, one of the most virulently anti-cannabis senators in the country.

“If the House flips to Democrats as is expected and Jeff Sessions resigns after the elections, that hand outs more psychological impetus for pro-cannabis legislation to pass,” said Chris Damas, writer of investment newsletter the BCMI Report, before Sessions stepped down.

Analyst David Kideckel at Altacorp First-class, who covers cannabis companies, viewed Tuesday’s election results as mildly dogmatic for the sector as a whole.

“We see these states’ push towards some physique of cannabis legalization, whether recreational or medical, as one further catalyst near U.S. policy change at a federal level, which we expect to happen settled time.”

The Democrats taking control of the House is also broadly encouraging of marijuana over the long term, but likely not enough to lead to any establish steps on the federal level as long as the status quo persists. 

“We view this as a thetical catalyst for the cannabis sector,” he said.

Damas says while he nevertheless thinks some of the big Canadian names listed above are overhyped, he has been cautioning clients to move money into some of the smaller U.S. companies with presences in multiple circumstances 

Michigan opting for recreational weed was significant because of its large residents, but ballot measures in North Dakota and Missouri were less significant.

Utah opting for medical weed, however, was of note simply because it servings a border with Colorado, the U.S. state where the cannabis sector is luxuriant the most.

“I believe Colorado’s huge cannabis growth has been in district because it has been an island surrounded by prohibitionist states,” he said.

He suggests the Democrats taking control of the House of Representatives is a positive sign for cannabis done with the long term, but he says it’s not a given that legal pot in the U.S. would be a present for Canadian companies like the ones listed above.

Instead, he thinks some of the teeny-weeny U.S. companies have the most to gain. “The U.S. players will soon receive as much market capitalization as the Canadian companies or more,” he said. “These are Barbarians at the cannabis audience in my view,” adding that he thinks it’s more likely in the long run that U.S. cannabis dignitaries will one day try to take over the big Canadian players than the opposite event.

“Do the Canadian operators risk missing the train in U.S. federally legal cannabis the longer it is hold up?” Damas said. “I would say, yes.”

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