Cannabis stocks finished Friday with gains almost across the board. The biggest players in the sector—including Tilray (NASDAQ:TLRY), Canopy Growth (NYSE:CGC), (TSX:WEED) and Aphria (NYSE:APHA), (TSX:APHA)—showed increases from roughly 1.5 to just over 8.5%.
That was in sharp contrast to the previous week’s close, when the very same stocks registered drops that ranged from 2.8 to almost 5%.
These swings can largely be attributed to a single fundamental driver—headlines that affected the sector. Two weeks ago, markets reacted negatively to the U.S. Food and Drug Administration (FDA) hearings on May 31, which focused on the use of CBD oil and whether to permit it in other products, such as drinks, food and wellness supplements. CBD is the non-psychoactive cannabinoid derived from marijuana and hemp that is reputedly beneficial for its medicinal properties.
Although the hearings were widely anticipated and viewed in theory as a major step toward legalization of cannabis and its derivatives in the United States on the Federal level, the exercise highlighted the intricate path and accompanying hurdles that still exist. When details of the situation were brought into focus by the testimony, the issue seemed complicated and markets reacted accordingly.
Investors cannot help but be frustrated by the slow pace of any cannabis sector progress in the U.S., not to mention somewhat discouraged. It sometimes feels that for every step forward—such as the passage last December of the U.S. Farm Bill that legalized hemp—circumstances then follow that seem to move everything two steps back: although hemp and hemp derivatives were legalized, adding hemp CBD to other products is still restricted in the U.S. CBD oil remains regulated by the FDA there whereas Canada will permit it beginning this coming October.
This past week, however, markets put all that behind them, and cannabis sector investors appeared to have turned their attention to other, more positive factors. Last week’s uptick in pot shares was triggered by a combination of factors: strong economic indicators on both sides of the border and positive regulatory news.
MJShareholders.com is the largest dedicated financial network and leading corporate communications firm serving the legal cannabis industry. Our network aims to connect public marijuana companies with these focused cannabis audiences across the US and Canada that are critical for growth: Short and long term cannabis investors Active funding sources Mainstream media Business leaders Cannabis consumers