US Political Speculation Feeds Cannabis Stocks

Lame duck session in Congress fires up cannabis policy

The reason cannabis' political path in the US has been reinvigorated relates to what is known as a "lame duck" session in Congress.

Although the Democrats lost control of the House to their Republican counterparts in the midterm election, there’s now a small window before the new leadership session begins and the old one ends to get a variety of things done.

This window is Democrats' last chance to control both the upper and lower houses of Congress with a sitting president — at least for now. Cannabis appears to have earned a spot on the party's to-do list amid other urgent needs.

Will US political rumors boost cannabis stocks and ETFs?

The AdvisorShares Pure US Cannabis ETF (NYSEAMERICAN:MSOS) and the Horizons Marijuana Life Sciences Index ETF (TSX:HMMJ), both of which are indicators of overall cannabis sentiment, have jumped based on the strength of these rumors.

MSOS rallied to nearly 8 percent on Monday (December 5), with names all across the US multi-state operator sector jumping as well. In Canada, the HMMJ fund saw a nearly 4 percent jump on Monday, but over the past five trading days is up 16.14 percent.

“I think there's a lot of enthusiasm in this space and we could see, we've seen some pretty violent moves here,” Nawan Butt, a portfolio manager overseeing Purpose Investments' cannabis coverage, told the Investing News Network last week.

Investor takeaway

Speculation and cannabis stocks go way back — this recent volatility is nothing new for investors embedded in the space.

With cannabis policy in the US front and center during the current lame duck session, market participants will want to watch out for drastic changes in the short term. Even the slightest rumor may be able to affect the sector's performance, and if the legislation discussed above is passed there could be major implications.