Cannabis Stocks Take a Hit After Sessions Rescinds the Cole Memo

By Jason Marcuz

The US cannabis industry has been growing at a fast pace. The legal marijuana market in America is expected to grow by 45% in 2018 alone. Between 2016 and 2021 the industry will have grown by 300%. However, this growth is expected to slow down due to government policy change. Marijuana stocks plunged recently in the wake of reports that Jeff Sessions, the US Attorney General, is moving to revoke major Obama-era policies that permitted legalization of cannabis to spread across several US states.

The largest cannabis company by market value, Canada’s Canopy Growth Corp, saw its share fall 17% in Toronto. Another firm, Aphria Inc, had its shares dip by 19%. US firms were not spared either. Scotts Miracle-Gro, a major lawn and garden products company, saw its shares fall by 5.2%.
These drops in value of cannabis-related firms come shortly after the Associated Press reported that Jeff Sessions is rescinding the Cole Memo, an Obama-era regulation that allowed legalized marijuana to flourish in states across the US. It will now be up to the Attorney General’s office to determine where weed is legal and whether or not to aggressively enforce federal cannabis laws. The actions of Mr. Sessions come just days after the state of California began selling recreational marijuana.

The feeling among stakeholders is that Sessions simply wanted to take away the shine from the news that California had successfully begun legal sales of recreational cannabis. There are about eight states as well as DC that have all enacted law to legalize the sale of recreational marijuana. There are twenty-one additional states that have passed a vote that allows marijuana plants to be used for medicinal purposes. These positive developments by states will see the legal weed industry grow by leaps and bounds to $50 billion by 2025 up from $6 billion in 2016.

However, the head of Drug Policy Alliance has condemned Session’s action as a return to the unpopular drug-war policies that unfairly targeted minority communities. According to Maria McFarland Sanchez-Moreno, Sessions is trying to maintain a system that has led to tremendous injustice and wasted federal resources on a vast scale. This move by Sessions is likely to cause further confusion about whether it is legal to buy, sell, grow, or deal in marijuana in states where marijuana is legal because age-old federal laws prohibit its growth.