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Cannabis stocks tank on report DoJ to rescind state protections

AG Jeff Sessions expected to announce decision later Thursday that will impact states that have legalized marijuana

By Ciara Linnane
Jan 4, 2018 10:53 a.m. ET



A strong rally in cannabis-related stocks this week to mark the start of sales of recreational marijuana in California came to a screeching halt Thursday, on a report that the Justice Department is about to throw a spanner in the works for the nascent weed industry.

U.S. Attorney General Jeff Sessions, a longtime marijuana opponent, is expected to rescind an Obama-era policy that gave protections to states that have legalized marijuana as long as they abide by a series of guidelines, the Associated Press reported, citing unnamed sources. An announcement that will scrap what is known as the Cole Memo is expected later Thursday, said the AP.

The news sent cannabis stocks sharply lower, with Nevada-based Cannabis Sativa Inc. CBDS, -21.97% sliding 22%. The company is involved in the research, development and licensing of marijuana products. Colorado-based cannabis farmer GrowGeneration Corp. GRWG, -24.71% slid 21%.

Many of the listed cannabis companies in North America are based in Canada, which is gearing up to fully legalize marijuana later this year. Those stocks were caught up in the downdraft, with Toronto-based medical marijuana distributor Supreme Cannabis Co. Inc. SPRWF, -7.52% down 9.8%, while Ontario-based rival Canopy Growth Corp. WEED, -6.13% slid 9.6%

Horizons Marijuana Life Sciences Index HMMJ, -5.49% which started trading on the Toronto stock exchange last month and tracks more than 20 marijuana-related companies in North America, was down 7.7%.

Shares of ETFMG Alternative Harvest ETF MJX, -4.32% fell 8%. The fund switched from tracking companies involved in Latin American real estate in December to one following an index of cannabis companies in the U.S. Those include Cronos Group Inc. MJN, -7.71% down 11%, Insys Therapeutics Inc. INSY, -14.65% , down 15% CanniMed Therapeutics Inc. CMED, -8.34% , down 7% and Turning Point Brands Inc. TPB, +0.39% down 2%.

Arcview Market Research said earlier this week that the legal marijuana industry is expected to generate nearly $40 billion in economic impact by 2021. That would be roughly a 150% increase in economic output from the $16 billion cannabis generated in 2017.

https://www.marketwatch.com/story/cannabis-stocks-tank-on-report-doj-to-rescind-state-protections-2018-01-04