US Political Speculation Feeds Cannabis Stocks

Cannabis Investing News
Cannabis plant grow operation.

Cannabis stocks are on the move, with market watchers waiting to see if Congress' lame duck session may allow key legislation to pass.

Cannabis stocks and funds are on the rise thanks to speculation about critical US cannabis policy.

Last Friday (December 2), US President Joe Biden signed into law a bill that will allow more access to cannabis for research purposes. In doing so, he okayed the first piece of federal cannabis legislation in the US.

The new bill has helped stoke the fires of speculation in the cannabis industry yet again, as have discussions around what the Senate may be able to accomplish before its current session comes to an end.

Is the Senate looking to pass SAFE and HOPE acts this year?

According to Axios, a group of bipartisan US Senators plans to attach cannabis policies to "must-pass year-end bills."

Senate Majority Leader Chuck Schumer (D-NY) and this group have paired two pieces of legislation, and appear prepared to include them in these key bills.

The first piece of legislation is the Secure and Fair Enforcement (SAFE) Banking Act, which would remove restrictions on banking in states that have legalized cannabis, allowing better access to funding and the ability to move beyond cash-only models.

The second is the Harnessing Opportunities by Pursuing Expungement (HOPE) Act. It is a priority for Democrats and would expunge criminal records related to cannabis.

“Schumer and the bipartisan group plan to attach this legislation to a must-pass year-end bill like the annual National Defense Authorization Act,” the Axios report states.

In addition to signing last week's research bill into law, Biden previously pardoned simple federal cannabis possession offenses before this year's midterm elections.

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.

Don’t forget to follow us @INN_Cannabis for real-time news updates!

Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.

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