Gaetz as Trump's AG seen as bullish for pot stocks, but confirmation looks unlikely

MW Gaetz as Trump's AG seen as bullish for pot stocks, but confirmation looks unlikely

By Victor Reklaitis and Steve Gelsi

Marijuana stocks are not moving much, as the Senate isn't expected to give its OK for Matt Gaetz to serve as attorney general

President-elect Donald Trump's decision to nominate controversial Republican Matt Gaetz for the post of attorney general has stunned GOP senators, leading to expectations that Gaetz won't actually get confirmed by the U.S. Senate for the job.

But if Gaetz does manage to win confirmation, his tenure at the Justice Department is expected to be positive for the cannabis industry MSOS.

"This is positive for cannabis as Gaetz has been one of the more vocal cannabis legalization backers in the House GOP. This should take off the table the risk that a Trump Attorney General attacks legalization at the state level by asserting federal authority," Jaret Seiberg, an analyst at TD Cowen Washington Research Group, said in a note.

Seiberg added, however: "We believe Gaetz may have trouble winning confirmation as Attorney General even with a 53 to 47 GOP majority in the Senate."

One betting market, Polymarket, was giving Gaetz just a 36% chance of winning confirmation.

Marijuana stocks reflected this pessimism on Thursday, the first trading day after Trump said he was nominating Gaetz.

The AdvisorShares Pure U.S. Cannabis exchange-traded fund MSOS fell 1.8%, while individual stocks of U.S cannabis companies also moved into the red. Verano Holdings Corp.'s stock (VRNOF) fell about 9% and Ayr Wellness Inc.'s (AYRWF) dropped by 1.2%, while Green Thumb Industries Inc. (GTBIF) subtracted about 5% and Trulieve Cannabis Corp. (TCNNF) moved lower by 4.7%.

Not all cannabis stocks, fell, however: Curaleaf Holdings Inc. (CURLF) rose 3% and Canopy Growth Corp. $(CGC.AU)$ rose 1.1%.

Still, if Gaetz is confirmed, cannabis backers see it as a positive, since the attorney general would head up an effort set in motion by the Biden administration to lower the federal classification of cannabis to the less restrictive level of Schedule III. Its current classification as a Schedule I drug puts it in the same category as heroin and LSD.

David Culver, senior vice president of public affairs for the pro-cannabis U.S Cannabis Council, said Gaetz ranks as "one of the most pro-cannabis Republicans on Capitol Hill."

Nominating him as U.S. attorney general signals Trump's "commitment to make good on his campaign promises around cannabis reform," Culver said.

Gaetz resigned from his House seat representing Florida on Wednesday evening following his nomination, effectively ending an ethics probe by a House committee into allegations including sexual misconduct and drug use.

His selection by Trump has sparked speculation that the president-elect is putting forward controversial picks in order to force GOP senators to confirm other choices in exchange for taking a stand against Gaetz.

-Victor Reklaitis -Steve Gelsi

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November 14, 2024 10:31 ET (15:31 GMT)

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