MW Cannabis stocks crater as Florida fails to garner needed votes for adult use
By Ciara Linnane
Trulieve, which backed the Florida campaign, saw its stock tumble 44% Wednesday, the most in a single day
Cannabis stocks tanked on Wednesday, led by Florida's biggest medical-cannabis operator Trulieve, which had backed a campaign for adult recreational legalization in Florida that failed to garner the needed votes.
Trulieve's stock (CA:TRUL) (TCNNF) was down 44% to put it on track for its worst-ever one-day percentage decline after the Florida marijuana amendment fell short of the 60% supermajority needed to approve constitutional amendments.
Trulieve had contributed almost $145 million of the $153 million campaign through the end of October, as the Associated Press reported. The measure was opposed by the Florida Republican Party and Gov. Ron DeSantis, who said it would reduce the quality of life by leaving a marijuana stench in the air.
The move weighed heavily on the AdvisorShares Pure US Cannabis exchange-traded fund MSOS, which was last down 25%. Trulieve has the second biggest weighting in the ETF at 24.1%, after Green Thumb Industries Inc. (CA:GTII) (GTBI), which was down 16%.
Other states voting on cannabis produced mixed results. Nebraska passed medical cannabis, but efforts to approve it for recreational use in North Dakota and South Dakota failed.
Alliance Global Partners said former President Donald Trump's sweeping victory in the presidential race, and the Republican control of the Senate, were promising for cannabis reform. Trump has said he is in favor of legalizing the plant and allowing companies access to the banking system.
"We still view rescheduling as the most likely federal catalyst to come-with the DEA hearing being pushed out to Jan/Feb 2025 (from Dec 2024)," AGP analyst Aaron Grey wrote in a note to clients.
"We will be keeping an eye on who Trump appoints as Attorney General along with who takes over as Republican Senate Majority Leader with Sen. Mitch McConnell retiring - and we view a more moderate person in both positions being more favorable to cannabis reform."
McConnell is an ardent opponent of cannabis legalization.
Trump posted on the issue on his Truth Social platform in September, saying he would vote yes in Florida. He also voiced support for rescheduling. Cannabis is still classified as a Schedule I drug, the same category as heroin. He supports a banking measure, which would greatly aid companies that currently have to run operations as a cash business, with all of the attendant risks.
Grey noted it's uncertain how big a priority cannabis will be for the new administration, however.
"We view it as increasingly important the DEA gets more comfortable tosign off on rescheduling cannabis to Schedule III, along with the new attorney general being in support," the analyst wrote.
Read now: Cannabis stocks drop sharply as DEA sets drug-rescheduling hearing after November election
There are currently 24 states that have legalized cannabis for recreational use, while 39 have a medical program. That means that nearly half of the Senate is represented by states with adult-use laws.
"The House remains undecided, but we see moderate cannabis reform, such as SAFER banking, being the most likely legislation with potential for passage in either case, & for that to be more likely to come post rescheduling," said Grey.
Other U.S. cannabis stocks were also tanking Wednesday. Curaleaf Holdings Inc. (CURLF) was down 22%, Cresco Labs Inc. (CRLBF), was down 21% and Verano Holdings Corp.(VRNOF) was down 17%.
Canadian cannabis stocks were caught in the downdraft with Canopy Growth Corp. $(CGC.AU)$ down 20%, Tilray Brands Inc. $(TLRY)$ was down 12% and Cronos Group Inc. (CRON) was down 7.4%.
-Ciara Linnane
This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
November 06, 2024 10:56 ET (15:56 GMT)
Copyright (c) 2024 Dow Jones & Company, Inc.
Comments