Cannabis stocks took a hit on both sides of the border Thursday, after U.S. Attorney General Jeff Sessions rescinded an Obama-era policy that barred federal law enforcement officers from interfering with marijuana sales in states where cannabis is legal.
It is believed this will create confusion about whether it is legal to buy, sell, or grow marijuana in these states, since it is federally prohibited. U.S. attorneys in states where marijuana is legal would now have to decide if they want to enforce federal laws.
This move will only affect the U.S. recreational market. U.S.-based companies producing medicinal cannabis such as India Globalization Capital, Inc. (NYSE American: IGC, Forum) and High Hampton Holdings Corp. (CSE: C.HC, Forum), would not be affected.
Moreover, some of those companies are also selling to Canada and Germany.
Though this enforcement is strictly based in the states, it could pose a challenge to Canadian cannabis companies producing for American markets.
Taking a snapshot of Thursday trading, some notable firms saw declines:
Many cannabis producers, both medical and recreational, have been planning to expand into states where it’s sale is legal. TGIF announced its intent to acquireBody and Mind Inc. (CSE: BAMM, OTC: BMMJ, Forum) and would be among the largest cultivation and production companies in Nevada. The company is also planning to expand into California.
Four days ago, California became the largest state to legalize recreational pot sales. Voters approved the law in 2016.
This also comes just a day after a chief executive with the Canadian Securities Exchange announced that trading soared to a record high $7.8 billion in 2017 thanks to a surge of marijuana-related listings, with the help of blockchain technology. That’s a 400% increase from 2016. 17.4 billion shares changed hands on the alternative exchange last year.
A recent report by Ameri Research valued the global legal cannabis market at $14.3 billion in 2016. It forecasts a growth at a CAGR of 21.1% to 2024, where the industry would be worth $63.5 billion.