😎 Summer Sale Exclusive - Up to 50% off AI-powered stock picks by InvestingProCLAIM SALE

Pot stocks soar as U.S. House committee clears bill on federal weed legalization

Published 11/21/2019, 12:19 PM
Pot stocks soar as U.S. House committee clears bill on federal weed legalization
WEED
-
MJ
-
APHA
-
ACB
-
TLRY
-

(Reuters) - Shares of marijuana companies rose on Thursday after a U.S. congressional committee passed a legislation to decriminalize cannabis, taking it a step closer to being approved by the Democratic-controlled House of Representatives.

The bill, which was passed 24 to 10 in the House Judiciary Committee on Wednesday, sent shares of Canopy Growth (TO:WEED), Aurora Cannabis (TO:ACB), Aphria Inc (TO:APHA) and Tilray Inc (O:TLRY) up between 8% and 15%.

"We think federal legalization would be a big positive for investor sentiment surrounding cannabis equities, which have been battered by oversupply and a steep price decline for the underlying commodity since becoming legal in Canada," said Garrett Nelson, senior equity analyst at CFRA Research.

The approval comes two months after the House passed a bill to advance legislation that would allow banks to provide services to cannabis companies in states where it is legal.

The latest bill, which has more than 50 co-sponsors, enables states to set their own policies while allowing to expunge federal marijuana convictions and arrests.

Additionally, the bill will authorize a 5% federal sales tax on marijuana products that are manufactured in or imported into the United States.

However, analysts were skeptical about the future of the bill.

"It's such an early step in a long process that there are no near-term implications for cannabis stocks. The Senate isn't likely to approve it, even if the House were to do so," said Alan Brochstein, managing partner at New Cannabis Ventures.

Shares in the sector are down more than 25% this year, according to the alternative harvest ETF (P:MJ), which tracks cannabis-related stocks, taking a blow from a slow roll out of retail stores and oversupply in Canada, as well as uncertainties related to U.S. regulations.

Weed companies have been spending heavily to expand and strike partnerships in the United States, banking on more states legalizing cannabis for both recreational and medical use.

Currently, 11 U.S. states have legalized marijuana for recreational use, while 33 states have approved it for medical purposes.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.