{"id":4006,"date":"2022-02-01T11:30:37","date_gmt":"2022-02-01T11:30:37","guid":{"rendered":"http:\/\/CAIiEOBASJzjR9AxK6NOqVJ_3ygqGQgEKhAIACoHCAow3cCjCzCgy7sDMKy5hAc"},"modified":"2022-02-01T11:30:37","modified_gmt":"2022-02-01T11:30:37","slug":"us-cannabis-stocks-tumbled-in-january-exacerbating-issues-confronting-industry-marijuana-business-daily","status":"publish","type":"post","link":"https:\/\/thcinct.com\/?p=4006","title":{"rendered":"US cannabis stocks tumbled in January, exacerbating issues confronting industry – Marijuana Business Daily"},"content":{"rendered":"
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U.S. cannabis stocks suffered a rout in January, tumbling more than the broader market as hopes for federal marijuana legalization in the near future continued to fade.<\/p>\n

The recent slide is expected to exacerbate existing issues confronting marijuana businesses, such as limited banking and funding options as well as higher taxes.<\/p>\n

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An exchange-traded fund that tracks U.S. multistate operators \u2013 AdvisorShares Pure US Cannabis ETF<\/a> \u2013 tumbled nearly 20% in January.<\/p>\n

By comparison, the much broader S&P 500 declined by a little more than 5%.<\/p>\n

The January slide came after steady declines in cannabis-related stocks in 2021, as major federal marijuana reform looked less and less likely in the short term.<\/p>\n

\u201cMost of the downturn, in my view, is a cumulative slow-motion capitulation to the idea that there won\u2019t be any federal legalization (of marijuana) anytime soon,\u201d said Frank Colombo, director of data analytics for New York-based Viridian Capital Advisors.<\/p>\n

The cannabis ETF, which trades on the New York Stock Exchange Arca as MSOS<\/a>, went from about $40 a share in early 2021 to a high of more than $55 a share.<\/p>\n

On Monday, it closed at $21.05, down from its 2022 opening price of $25.93.<\/p>\n

Marijuana stocks soared in the first few weeks of 2021 with the heady optimism that resulted from a new Democratic administration and a flip in the Senate from Republican control.<\/p>\n

\u201cThe few blips up (last year) all corresponded to times that there was a little bit of optimism (about reform),\u201d Colombo said.<\/p>\n

One inflection point occurred after Senate Majority Leader Chuck Schumer said in late January 2021 that he was going to introduce a sweeping marijuana reform bill<\/a>. Schumer hasn\u2019t yet introduced that legislation.<\/p>\n

\u201cAll of the other positive news like states going rec didn\u2019t really do much,\u201d Colombo said. \u201cThe market is fixated on this whole legalization stuff.\u201d<\/p>\n

Monday proved to be the latest example.<\/p>\n

After House lawmakers revived the SAFE Banking Act<\/a> on Friday as an attachment to a technology and innovation spending bill, investors immediately responded: MSOS increased on Monday by 5.36% to $21.05.<\/p>\n

Business challenges<\/strong><\/p>\n

Matt Karnes, founder of New York-based cannabis financial advisory firm GreenWave Advisors, agreed that the lack of progress on federal marijuana reform has exacerbated the market downturn.<\/p>\n

\u201cThe cannabis industry \u2013 plant-touching and to a lesser extent ancillary \u2013 is likely more vulnerable to market volatility associated with overall economic uncertainty due to the inherent limitation\/headwinds of federal (marijuana) illegality,\u201d he told MJBizDaily <\/em>via email.<\/p>\n

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