Today is the annual celebration of cannabis culture, but with legalization efforts stalled in Washington, DC, investors in cannabis companies don't have a lot to celebrate, reports the Wall Street Journal. The value of many well-known marijuana stocks has dropped by more than 50%, and they could fall further if Congress fails to pass legislation before the midterms, leaving the drug illegal at the federal level. Senate Majority Leader Chuck Schumer recently announced that the introduction of a bill to end cannabis prohibition has been pushed back to August, four months later than planned, a possible sign that the Democrat doesn't believe it has enough votes to pass.
Legal marijuana sales rose sharply during the pandemic and hit a record $27 billion last year, but prices have slumped amid a glut in supply and the federal ban makes it harder for companies to borrow. After the 2020 election, cannabis stocks "went freakin’ hog wild, because everybody thought, ‘Holy s***, Democrat White House, Democrat Senate, we’ll get legalization,’" Scott Greiper, president of Viridian Capital Advisors, tells Politico. But since then, nothing has been done to lift federal restrictions and optimism has faded, though industry execs hope Congress will be able to at least pass legislation making it easier for pot companies to access banking services.
Amber Littlejohn, executive director of the Minority Cannabis Business Association, tells Politico that another problem is that illegal markets continue to flourish, especially on the East Coast, where the number of marijuana businesses is strictly limited. But with more states fully legalizing the drug, analysts say the long-term outlook for the industry is still bright. On Thursday, sales of marijuana for recreational use will begin in New Jersey, one of 18 states to have legalized recreational pot for people over 18, the AP reports. Recreational sales are expected to begin in New York before the end of the year. (More marijuana stories.)
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