Cannabis Stocks Plummet As Sessions Rescinds Protections Throwing Marijuana Markets Into Chaos
As of 2 p.m., Thursday afternoon cannabis stocks continued to plummet on news of U.S. Attorney General Jeff Sessions decision to rescind the Obama-era Cole memo, the policy which guided federal prosecutors discretion in states with legalized marijuana. The North American Marijuana Index, which had seen record high gains before the announcement, fell precipitously on Thursday, losing 35 points for a 10 percent loss with a little less than two hours left in the trading day. Confusion and chaos rule the market as investors and industry insiders turn their concerns from profits to possible prison time.
The Cole memo, issued in 2013 under the Obama-era Justice department, assured states where marijuana is legal that the federal government would not stand in their way. Cannabis is currently legal in eight states and the District of Columbia.
Rescinding the memo gives federal prosecutors more leeway in deciding how to approach marijuana prosecutions.
"In deciding which marijuana activities to prosecute under these laws with the Department's finite resources, prosecutors should follow the well-established principles that govern all federal prosecutions," Attorney General Sessions wrote in a one-page memo outlining the Justice Department’s new policy.
In a statement released earlier today, cannabis statisticians New Frontier Data noted that Session’s decision would upend the cannabis industry - a forecast that has borne out in early market data.
“The immediate impact of Attorney General Session’s decision to rescind the Cole Memo will be felt most acutely in the public markets,” commented New Frontier Data CEO and founder Giadha Aguirre De Carcer.
Public markets fell dramatically on Thursday following the announcement, with the most significant losses felt on Wall Street. The United States Marijuana Index fell 19.94 points by Thursday afternoon, an 18 percent drop, following a week of highs due to the opening of California’s recreational market.
Individual companies were taking on massive losses as well on Thursday, with names like Cannabics Pharmaceuticals Inc. (CNBX) and Terra Tech Corp. (TRTC) losing 30 percent per share. Major cannabis funds fared no better on Thursday, with the Horizons Marijuana Life Sciences Index ETF down almost 8 percent by mid-afternoon and the ETFMG Alternative Harvest ETF (MJX) down 6 percent around the same time.
New Frontier Data compared today’s announcement to earlier in the Trump administration’s tenure when Sean Spicer sent a similar fright through the industry.
“This is a similar though more acute reaction to what we saw after former Press Secretary Sean Spicer made comments one year ago suggesting that the administration was going to enforce medical and recreational cannabis differently,” New Frontier’s CEO continued.
According to their statement, however, New Frontier believes that businesses currently up and running will not see an immediate effect. Consumers in California will still wake up tomorrow with the ability to purchase recreational marijuana, and companies will not be laying off employees anytime soon.
“In the long run, the key question is how, specifically, the DOJ intends to enforce federal law in legal states, and that is still too early to tell,” said Giadha Aguirre De Carcer.