What happened
Cannabis stocks are dropping on a day that marijuana users like to commemorate. April 20, or 4/20, is a day when pot smokers around the world gather to celebrate a recreational drug that remains illegal in the United States. Investors in Canadian pot stocks aren't celebrating today, however. Names including Tilray (TLRY 6.98%), Canopy Growth (CGC 15.03%), and Sundial Growers (SNDL 10.11%) were all down in Wednesday trading. As of 12:06 p.m. ET, these names were lower by 5.7%, 2.7%, and 4.6%, respectively.
So what
Many marijuana enthusiasts may be ready to celebrate the annual 4/20 tradition today, but pot smokers in New Jersey will be looking forward more to tomorrow. Adult-use sales begin there on Thursday, now the state has legalized recreational cannabis. But investors in Canadian companies want more than U.S. states' approval -- they want legalization on the federal level. And progress toward that goal has been delayed.
Image source: Getty Images.
Now what
At the start of this month, the U.S. House of Representatives passed the Marijuana Opportunity, Reinvestment, and Expungement (MORE) Act. That proceeded mostly along party lines, however, and it was just a start to what backers of legalization in the U.S. hope for. That House vote effectively agreed to legalize marijuana by removing it from the list of federally banned drugs under the Controlled Substances Act. But that's happened before, and the real challenge will be in the Senate.
After previously planning to take up their version of a legalization bill by the end of this month, Senate leaders have now pushed that timeline back to no later than the Senate's August recess, according to The Hill.
That delay doesn't thrill investors who want companies like Tilray and other Canadian growers to have more access to U.S. sales of marijuana.
Tilray already has access to U.S. customers through its ownership of SweetWater Brewing, hemp producer Manitoba Harvest, and Breckenridge Distillery. It also retains a majority position in the outstanding senior secured convertible notes of U.S.-based cannabis retailer MedMen Enterprises. Tilray investors would like nothing more than for the company to take full control of MedMen and fully integrate the multistate operator (MSO) into its overall cannabis operations.
That will take a positive outcome from the Senate, however. With that action delayed, many investors continue to be wary of owning Canadian pot stocks. Users, however, will continue to celebrate today, holding out hope that 4/20 might become an even bigger deal in future years.
