Cannabis Market Recovers after Steep Decline

 

  • Attorney General Jeff Sessions' Jan. 4 announcement rescinding the Cole Memo sparked a steep but short-lived selloff of U.S. cannabis stocks.
  • By January 11th, stocks had rebounded to within 5% of their value before the Cole Memo was rescinded.
  • The 21%, one-day decline was fueled by investors unnerved by implications for the federal government's tighter enforcement of cannabis prohibition in legal states.
  • Regardless, the market soon rebounded as risk-tolerant investors seized opportunities to pick up inexpensive stocks, after a dramatic run-up in prices in Q4 2017.
  • In December 2017 alone, the Index rose 50% with investors excited by pending activations of adult-use cannabis markets in California and Canada.
  • The rebound in stock prices suggests greater confidence in publicly traded cannabis companies, and the viability of the industry overall, despite Sessions’ statement.

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