Shares of cannabis companies traded broadly higher Wednesday, as U.S. midterm elections are likely to usher in a green wave, with Michigan voting to legalize recreational pot and other states supporting medical marijuana likely just the beginning.
The sector got a further boost after long-time cannabis opponent Attorney General Jeff Sessions resigned “at the request” of President Trump.
The ETFMG Alternative Harvest exchange-traded fund
shot up 6.2% in late-afternoon, with 33 of 37 components trading higher, putting it on track for a seventh straight gain. The sector tracker has now run up 25% during its win streak.
The Horizons Marijuana Life Sciences ETF
ran up 5.3%, also headed for a seven-day win streak.
Among the most-active stocks, Aurora Cannabis Inc.
hiked up 6.4%, Canopy Growth Corp.
tacked on 6.0%, Cronos Group Inc.
surged 8.4% and Tilray Inc.
Jeff Sessions resignation, coupled with a Democrat-controlled House of Representatives, could prove a boon for the pot industry in the U.S. It was Sessions who rescinded an Obama-era policy used as protection for states that have legalized marijuana.
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After Tuesday’s midterm elections, Michigan became the 10th state — and the District of Columbia — which voted to legalize marijuana. Although South Dakota voted down a measure to legalize pot, Missouri and Utah voters supported legalizing it for medicinal use.
But that’s not all. Democrats winning a majority in the House for the first time since cannabis liberalization began marks “a fundamental shift in the U.S. legislative landscape which could usher in a period of positive cannabis reform,” GMP Securities analyst Robert Fagan wrote in a note to clients.
“For instance, Dems will now gain majority control of the powerful House Rules Committee, which previously acted as a dogged gatekeeper of positive cannabis reform for the past 2 years under the oversight of anti-cannabis Republican Pete Sessions,” Fagan wrote, with Sessions losing his House seat from Texas to Democrat Colin Allred.
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“In our view, these midterm results combined with a strong pipeline of upcoming catalysts should serve to drive a decoupling of valuation multiples for the U.S. cannabis sector to eventually reach a premium over Canadian LP peers,” Fagan wrote.
Canaccord Genuity analyst Bobby Burleson said he believes Michigan is a “particularly important market” given the state’s population. He estimates Michigan’s marijuana market to grow from a value of about $856 million in 2018 to $1.3 billion in 2022.
Gubernatorial wins by a pro-cannabis candidate in Illinois and by the first Democrat in Nevada since 1994 should be viewed as wins for U.S.-based cannabis companies.
Among U.S. companies poised to benefit from Illinois and Nevada results, according to Burleson, shares of MedMen Enterprises Inc.
rallied 7.8% and Planet 13 Holdings Inc
ran up 9.0%.
In other pot stocks, shares of Toronto-based Namaste Technologies Inc.
gained 5.7% after the company said its Cannmart Inc. subsidiary signed an agreement with AgMedica Bioscience Inc. to buy medical cannabis from AgMedica to sell on Cannmart’s online platform. AgMedica is a licensed producer of medical cannabis under the Access to Cannabis for Medical Purposes Regulations (ACMPR), which holds cultivation and sales licenses.
MariMed Inc.’s stock
climbed 7.8% after the Massachusetts-based manager of cannabis facilities said it named Charles Finnie, most recently a senior research analyst at Roth Capital Partners, its chief strategy officer, to head up its merger-and-acquisitions, investment and investors relations strategies.
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Elsewhere, shares of GW Pharmaceuticals PLC
gained 6.3%, Aleafia Health Inc.
fell 1.7%, Green Organic Dutchman Holdings Ltd.
slipped 0.6%, Hexo Corp.
advanced 2.7% and Supreme Cannabis Co. Inc.
The ETFMG ETF has now run up 37% over the past three months and the Horizons ETF has soared 40%, while the S&P 500 index
has lost 1.8%.
Check out: MarketWatch’s comprehensive coverage of the cannabis sector, including profiles of a number of key players, in one place.