Cannabis Stocks Take a Hit After Trump’s Executive Order Falls Short of Expectations
Shares of cannabis companies plummeted on Thursday, wiping out earlier gains, following President Donald Trump’s signing of an executive order aimed at relaxing federal regulations on marijuana. The order, which reclassifies cannabis as a less dangerous drug, is seen as a significant shift in pot regulation since 1970. However, it falls short of expectations by not including a mandate for cannabis banking, a crucial move that would have eased the operating environment for companies.
The lack of a banking mandate was seen as a major disappointment by investors, leading to a sharp decline in cannabis stocks. Some companies saw their shares drop by as much as 12%, erasing earlier gains.
Analysts point out that this pattern is not new. Each time there has been a step forward in the direction of legalization, cannabis stocks have experienced a brief boom followed by a slide. Art Hogan, chief market strategist at B. Riley Wealth, notes that the latest development is a prime example of this phenomenon.
Despite the setback, the executive order is still seen as a significant step forward for the cannabis industry. It would ease access to capital, reduce the tax burden, and accelerate research and development for companies. However, the lack of a banking mandate means that companies will still face significant challenges in accessing traditional banking services and navigating the complex regulatory landscape.
The move is seen as a significant shift in the direction of cannabis policy, and its implications will be closely watched in the coming months.
