Why cannabis stocks Aphria, Aurora Cannabis, Charlotte’s Web, and Tilray are sliding down today
Several cannabis stocks fell on Wednesday. Shares in aphria (NASDAQ: APHA) were down 6.4% at 3:19 p.m. Tilray (NASDAQ: TLRY) The stock fell 6.7%. Charlotte’s web holdings (OTC: CWBHF) Stocks fell 6.4%. Aurora cannabis (NYSE: ACB) The stock lost 5.7%. Other top pot stocks saw smaller declines.
When so many stocks are going down in the same industry, there is usually a common denominator. In this case, a potential culprit is what Vice President Kamala Harris said in an interview with the San Francisco Chronicle published yesterday. The vice president said the Biden government was too preoccupied with other priorities to tackle marijuana decriminalization or other major cannabis reforms. This sideline of cannabis-related efforts could raise investor doubts about an imminent move in the near future.
However, marijuana stocks really began to slide on Wednesday after Natalie Ready tweeted with Politico that the Treasury Department’s Alcohol and Tobacco Tax and Trade Bureau met with various cannabis advocacy groups to discuss cannabis regulations. Investors may be more concerned about the possibility that cannabis reform measures will not meet expectations than they will not reform at all.
Image source: Getty Images.
What does it all really mean? Nothing.
Concerns that the Biden government will fail to deliver on its election promise to decriminalize marijuana are premature. After all, President Biden has been in office for less than three months. Worrying about what final regulations might look like if major cannabis reforms advance is also a waste of time. It is better to wait and see what changes will ultimately be proposed.
What we see in cannabis stocks today largely reflects their inherent volatility. These stocks tend to move either higher or lower through sheer speculation.
You’ve probably noticed that most of the hardest-falling stocks are Canadian cannabis producers – Aphria, Aurora Cannabis, and Tilray. These companies are particularly concerned about the opportunity to enter the lucrative U.S. cannabis market.
Charlotte’s Web, on the other hand, is already a leader in the US hemp CBD market. However, the company hopes to expand into the marijuana market once cannabis is legalized at the federal level.
The best thing investors can do right now is to see what happens in terms of US cannabis reform. Meanwhile, the U.S. cannabis market continues to grow without any changes at the federal level. Several US cannabis operators from several states are already benefiting from this growth.
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Keith Speights has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Charlotte’s Web Holdings. The Motley Fool recommends Charlotte’s Web. The Motley Fool has a disclosure policy.
The views and opinions expressed are those of the author and do not necessarily reflect those of Nasdaq, Inc.