By Tomi Kilgore, MarketWatch
Shares of cannabis companies traded broadly, and in many cases sharply higher Wednesday, as U.S. midterm elections are likely to usher in a green wave, with Michigan voting to legalize recreational pot and other states supporting medical marijuana likely just the beginning.
The sector got a further boost after long-time cannabis opponent Attorney General Jeff Sessions resigned “at the request” of President Trump.
The ETFMG Alternative Harvest exchange-traded fund /zigman2/quotes/204332491/composite MJ +0.17% shot up 7.1% for a seventh straight gain, matching the longest win streak this year in August. The sector tracker has now run up 26% during its win streak.
The Horizons Marijuana Life Sciences ETF /zigman2/quotes/208856346/delayed CA:HMMJ -0.45% ran up 8.1%, also for a seven-day win streak.
Among the most-active stocks, Aurora Cannabis Inc. /zigman2/quotes/210559470/composite ACB +13.81% hiked up 9.2%, Canopy Growth Corp. /zigman2/quotes/200603886/composite CGC -3.76% tacked on 8.2%, Cronos Group Inc. /zigman2/quotes/206842762/composite CRON -0.47% surged 8.4% and Tilray Inc. /zigman2/quotes/209129655/composite TLRY +15.19% soared 31%.
Jeff Sessions resignation, coupled with a Democrat-controlled House of Representatives, could prove a boon for the pot industry in the U.S. It was Sessions who rescinded an Obama-era policy used as protection for states that have legalized marijuana.
After Tuesday’s midterm elections, Michigan became the 10th state — and the District of Columbia — which voted to legalize marijuana. Although South Dakota voted down a measure to legalize pot, Missouri and Utah voters supported legalizing it for medicinal use.
But that’s not all. Democrats winning a majority in the House for the first time since cannabis liberalization began marks “a fundamental shift in the U.S. legislative landscape which could usher in a period of positive cannabis reform,” GMP Securities analyst Robert Fagan wrote in a note to clients.
“For instance, Dems will now gain majority control of the powerful House Rules Committee, which previously acted as a dogged gatekeeper of positive cannabis reform for the past 2 years under the oversight of anti-cannabis Republican Pete Sessions,” Fagan wrote, with Sessions losing his House seat from Texas to Democrat Colin Allred.
“In our view, these midterm results combined with a strong pipeline of upcoming catalysts should serve to drive a decoupling of valuation multiples for the U.S. cannabis sector to eventually reach a premium over Canadian LP peers,” Fagan wrote.
Canaccord Genuity analyst Bobby Burleson said he believes Michigan is a “particularly important market” given the state’s population. He estimates Michigan’s marijuana market to grow from a value of about $856 million in 2018 to $1.3 billion in 2022.
Gubernatorial wins by a pro-cannabis candidate in Illinois and by the first Democrat in Nevada since 1994 should be viewed as wins for U.S.-based cannabis companies.
Among U.S. companies poised to benefit from Illinois and Nevada results, according to Burleson, shares of MedMen Enterprises Inc. /zigman2/quotes/201940908/delayed MMNFF -19.75% rallied 5.8% and Planet 13 Holdings Inc /zigman2/quotes/204244604/delayed PLNHF -9.50% ran up 6.9%.
In other pot stocks, shares of Toronto-based Namaste Technologies Inc. /zigman2/quotes/205997820/delayed NXTTF -5.22% gained 15% after the company said its Cannmart Inc. subsidiary signed an agreement with AgMedica Bioscience Inc. to buy medical cannabis from AgMedica to sell on Cannmart’s online platform. AgMedica is a licensed producer of medical cannabis under the Access to Cannabis for Medical Purposes Regulations (ACMPR), which holds cultivation and sales licenses.
MariMed Inc.’s stock /zigman2/quotes/209406908/delayed MRMD -9.64% climbed 4.2% after the Massachusetts-based manager of cannabis facilities said it named Charles Finnie, most recently a senior research analyst at Roth Capital Partners, its chief strategy officer, to head up its merger-and-acquisitions, investment and investors relations strategies.
Elsewhere, shares of GW Pharmaceuticals PLC /zigman2/quotes/209686240/composite GWPH -0.94% gained 5.7%, Aleafia Health Inc. /zigman2/quotes/203485112/delayed ALEAF +2.29% fell 5.5%, Green Organic Dutchman Holdings Ltd. /zigman2/quotes/204266798/delayed TGODF -12.12% gained 1.4%, Hexo Corp.advanced 3.9% and Supreme Cannabis Co. Inc. /zigman2/quotes/203819708/delayed SPRWF +12.24% advanced 5.0%.
The ETFMG ETF has now run up 38% over the past three months and the Horizons ETF has soared 41%, while the S&P 500 index /zigman2/quotes/210599714/realtime SPX -3.37% has lost 1.5%.