Cannabis Stocks Tumble After Cole Memo Announcement
Despite a robust start at the beginning of the week as California began legal sales of recreational cannabis, pot stocks took a plunge on Thursday after U.S. Attorney General Jeff Sessions announced his intention to rescind certain federal protections for states where the plant has been legalized. The so-called Cole memo mandates that federal prosecutors de-prioritize marijuana cases in these states. Sessions has made his hardline stance on cannabis quite clear since becoming AG under the Trump administration, and had been hinting for months that a federal crackdown could be imminent.
Pot Stocks Down in US and Canada
Canadian markets, where the majority of North American pot stocks are listed, felt the aftershocks of the announcement despite the country’s plan to fully legalize cannabis in July of this year. Toronto-based medical marijuana distributor Supreme Cannabis Co. Inc.(SPRWF), was down 13%, while Ontario-based rival Canopy Growth Corp.(WEED) was down by 12%.
State Governments React to Sessions Annoucement
Pot stocks began to rally on Friday as many analysts believe that Sessions’ decree does not mean the end of legal cannabis. Several Governors of legal states have issued statements arguing rescinding the Cole memo would cost states millions of dollars in tax revenue currently coming in. The Colorado State Senate Democratic Caucus tweeted:
“We'll give Jeff Sessions our legal pot when he pries it from our warm, extremely interesting to look at hands.”
The group went on to add that legal cannabis has already raised over $600 million in tax revenue since adult-use sales began five years ago, funds that go directly to improving the community.
Earlier this week, The Arcview Group stated that $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. Despite Thursday’s announcement, and subsequent drops in pot stocks, experts believe that things should settle quickly, and will not affect long-term growth as predicted.