An Introduction
Every time legislation in the U.S. regarding cannabis is introduced to provide much-needed clarity for legal operators, remove barriers to research, small business growth, and banking access and/or allow for better regulation of the growing interstate market. all while respecting each state’s decision to legalize or prohibit cannabis the stock prices of the American MSOs jump in price and it has happened again with the reintroduced of legislation earlier this week in a bill named the States 2.0 Act.
Here are the details of the Act as sourced from todays thedalesreport newsletter by Anthony Varrell entitled I Love The Smell Of Cannabis Reform In The Morning and how it impacted the stock prices of the 5 largest MSO companies and one Canadian company with major plans to enter the U.S. marketplace once the matters in the proposed Act are addressed.
Key Features Of the States 2.0 Act
The Act is designed to finally resolve the long-standing conflict between federal marijuana law and state-legal cannabis programs, as follows:
- Amends the Controlled Substances Act to ensure that individuals and businesses operating legally under state or tribal cannabis laws would no longer face federal criminal penalties;
- Legalizes interstate cannabis commerce;
- Exempts legal businesses from IRS Section 280E, allowing standard tax deductions;
- Calls for a federal regulatory framework managed by the Alcohol and Tobacco Tax and Trade Bureau;
- Mandates FDA oversight of cannabis in food, drugs, supplements, or cosmetics;
- Prohibits combining cannabis with adulterated substances like alcohol and tobacco;
- Protects cannabis transportation between legal jurisdictions;
- Requires a GAO study on legalization and traffic safety;
- Maintains penalties for unlicensed activity and illegal operations involving minors.
Varrell concludes his newsletter with the words: “Sure, the bills sound promising but let’s not light up the celebration joint just yet. We’ve been here before—hopeful headlines, lofty promises, and then legislative ghosting. Maybe this time will be different, but it’s wise to keep a healthy dose of skepticism close at hand.”
Below is the effect the announcement of the proposed legislation had on the 6 MSO stocks in the MunAiMarkets American Cannabis MSO Stocks Model Portfolio: for the week ending April 18th, MTD and YTD presented in descending order:
- Verano Holdings (VRNOF): UP 34.6% w/e April 18th; UP 7.7% MTD; DOWN 40.7% YTD;
- Curaleaf Holdings (CURLF): UP 22.5% w/e April 18th; DOWN 1.0% MTD; DOWN 32.4% YTD;
- Trulieve Cannabis (TCNNF): UP 14.5% w/e April 18th; Unchanged MTD; DOWN 18.4% YTD;
- Cresco Labs (CRLBF): UP 11.7% w/e April 18th; DOWN 14.1% MTD; DOWN 18.3 YTD;
- Green Thumb Industries (GTBIF): UP 11.1% w/e April 18th; DOWN 0.9% MTD; DOWN 27.1% YTD;
- TerrAscend Corporation (TSNDF): UP 7.7% w/e April 18th; DOWN 42.9% MTD; DOWN 53.3% YTD
The Canadian cannabis LP company has structured its U.S. operations through Canopy USA with its success in the U.S. depending heavily on federal cannabis reform and, as such, it responded in like fashion to the American MSOs as highlighted above. Below is how it compares with its peers in the MunAiMarkets Canadian Cannabis LPs Stocks Model Portfolio:
- Canopy Growth (CGC): UP 26.6% w/e April 18th; UP 20.2% MTD; DOWN 56.6% YTD;
- Organigram Global (OGI): UP 3.9% w/e April 18th; UP 3.9% MTD; DOWN 33.5% YTD;
- Aurora Cannabis (ACB): UP 3.7% w/e April 18th; UP 0.2% MTD; DOWN UP 4.5% YTD;
- Cronos Group (CRON): UP 1.1% as of w/e April 18th; DOWN 1.1% MTD; DOWN 12.4% YTD;
- Tilray Brands (TLRY): DOWN 8.2% as of April 18th; DOWN 31.8% MTD; DOWN 66.6% YTD.
- Here are some key factors why Tilray’s stock price has declined so much:
- Reverse Stock Split Proposal: The company announced plans for a reverse stock split, aiming to boost its share price and maintain compliance with Nasdaq’s listing requirements. While this move can stabilize trading, it often triggers short-term selloffs due to investor concerns like what has occurred with TLRY.
- Analyst Downgrade: Piper Sandler lowered their price target for Tilray from $2.00 to $1.00, which negatively impacted investor sentiment.
- Financial Performance: Tilray’s recent earnings report showed a larger-than-expected loss, missing analysts’ estimates. This raised concerns about the company’s financial health.
- Market Trends: Broader market conditions and sector-specific challenges in the cannabis industry have also contributed to the decline.
- The stock has hit a new 52-week low reflecting these combined pressures.
- Here are some key factors why Tilray’s stock price has declined so much:
Please note: For
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- the reasons behind the price change in a specific stock go HERE and ask “Why did x stock change price so much this week?”
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