The US House of Representatives has voted in favor of a bill seeking to legalize cannabis.
The decision to introduce and vote on this bill caused cannabis stocks to go on a run this past week — however, the volatility was described to the Investing News Network (INN) as built on hype and speculation.
Keep reading to find out more cannabis highlights from the past five days.
House vote described as “posturing” by representatives
The bill voted on in the House this week is an update to the well-known and pre-existing MORE Act, which was originally passed by the House back in December 2020.
The bill seeks to completely deschedule cannabis from the Controlled Substances Act, and emphasizes the correction of negative consequences brought on by the drug’s criminal status.
After being passed initially, the bill then got caught in gridlock in the Senate.
“Now, it’s up to the Senate to finish the job — it must begin to deliver on long overdue justice to end the status quo of racist and counterproductive enforcement,” Maritza Perez, director of the Office of National Affairs at the Drug Policy Alliance, said after the latest vote this week. “With more than two-thirds of Americans in favor of reform, it should be a swift and easy choice.”
Cannabis support has continued to steadily increase among US voters. The most recent Gallup public opinion poll shows that a 68 percent majority of Americans support cannabis reform.
However, experts believe passing in the Senate might be easier said than done.
According to a report from CNBC, Jaret Seiberg, an analyst with Cowen, does not see the bill in its current form making it through the Senate. He called the vote “symbolic,” but little more than that.
Markets go on a run based on speculation and hype, expert says
As a preview document for Friday’s (April 1) House vote went public earlier this week, cannabis stock saw another swing of sentiment driven by headlines.
The ETFMG Alternative Harvest ETF (NYSEARCA:MJ) reached a weekly high of US$11.18 on Wednesday (March 30), indicating a clear value uptick from the start of the trading week. For its part, the Horizons Marijuana Life Sciences Index ETF (TSX:HMMJ) reached a high of C$6.16 during the week.
Additionally, several stock names went for runs throughout the week.
However, those gains have since come back down, reinstating balance for cannabis stocks. MJ and HMMJ are both down by 5.13 percent and nearly 5 percent, respectively.
The downturn can be traced back to the fact that the bill faces a likely unsuccessful run in the Senate.
“We are not pounding the tables yet,” said Nawan Butt, portfolio manager with Purpose Investments. “This is not the legislation that we’re looking for.” Charles Taerk, CEO of Faircourt Asset Management made a similar statement, telling INN, “I think there’s a little bit too much speculation right now.”
Cannabis company news
- Trulieve Cannabis (CSE:TRUL,OTCQX:TCNNF) released its Q4 and year-end 2021 financial results for investors. The US operator reported an uptick of 80 percent in its revenue, reaching US$938.5 million for the whole year, and a net income line of US$18 million. As far as its latest quarter goes, the producer reported US$305.3 million in revenue and a net loss of US$71.5 million.
- Sundial Growers (NASDAQ:SNDL) confirmed the closing of its acquisition plan for alcohol retailer Alcanna (TSX:CLIQ). The retailer has a majority stake in Nova Cannabis (TSX:NOVC), a separate retailer with 78 cannabis stores in the country.
- Auxly Cannabis Group (TSX:XLY,OTCQX:CBWTF) issued its Q4 and year-end 2021 results and provided an outlook for 2022. The Canadian operator reported a net loss of C$18.4 million for the most recent financial period, despite posting a record net revenue of C$29.3 million.
- RIV Capital (CSE:RIV,OTC Pink:CNPOF) announced an acquisition plan to buy New York cannabis operators Etain and Etain IP for US$247 million. Additionally, the firm confirmed the appointment of Mark Sims as the new president and CEO of the company. Departing CEO Narbé Alexandrian will leave the company to pursue separate business opportunities.
Don’t forget to follow us @INN_Cannabis for real-time updates!
Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.