Stock prices for cannabis companies jumped in the hours after Attorney General Jeff Sessions announced his resignation on Wednesday. The spike follows another uptick in share prices leading up to Tuesday’s midterm elections.
Canadian medical marijuana firm Tilray was the day’s biggest winner, with shares closing up 30 percent on the Nasdaq stock exchange. Canopy Growth was up 8.1 percent in New York Stock Exchange trading, while Aurora Cannabis was up 9 percent. Shares in Cronos Group were up more than 8 percent at the close of Nasdaq trading. The rally extended into after-hours trading as stocks in all four companies continued to rise.
Cannabis exchange-traded fund Alternative Harvest Marijuana ETF, also listed on the Nasdaq, saw a spike of 5.6 percent in the hour after the announcement of Sessions’ resignation. Shares were up to $36.97, a gain of nearly $2.
Sessions, long an opponent of legalizing marijuana, announced on Wednesday that he was resigning from the top position at the U.S. Department of Justice at the request of President Trump. Art Hogan, chief market strategist at investment bank B. Riley FBR, said that news of the attorney general’s departure was received positively by cannabis investors.
“You’re happy if you’re long the cannabis stocks. He was the biggest roadblock to broadening that out to a national conversation,” said Hogan.
Will Federal Cannabis Policy Change?
Although Sessions was an avowed opponent of efforts to legalize cannabis by the states and at the federal level, a change in Department of Justice policy regarding enforcement of marijuana laws in pot-legal states did not lead to a rise in prosecutions.
Vivien Azer, a marijuana analyst at Cowen Group, wrote on Wednesday that a change in leadership at the Justice Department “could cut either way. Attorney General Jeff Sessions rescinded the Cole Memo and has opposed legalization. Yet the Justice Department under his leadership has not done anything to go after cannabis in states that have legalized.”
President Trump has not yet said who he will nominate to replace Sessions. In the interim, he has appointed Matthew Whitaker, Sessions’ chief of staff, as acting attorney general. Whoever becomes the new attorney general could have a lasting impact on cannabis policy and enforcement.
“The President can be very unconventional in his selections. Obvious choices like Senate Majority Whip John Cornyn would be negative for cannabis as the senator is a cannabis opponent,” Azer said. “Yet the President could opt for an unconventional pick. Either way, the best case scenario is a continuation of a lack a Justice Department action.”
In a tweet sent out after Sessions’ announcement on Wednesday morning, President Trump extended his gratitude to the former attorney general.
“We thank Attorney General Jeff Sessions for his service, and wish him well! A permanent replacement will be nominated at a later date,” the president tweeted.
Supporters of legal cannabis also got a boost from Tuesday’s midterm elections when Texas Rep. Pete Sessions (no relation to Jeff) lost his seat in the House of Representatives. As the chairman of the powerful Rules Committee, he had blocked all attempts to reform cannabis policy from advancing to the House floor. Also Tuesday, voters in Michigan made that state the tenth to legalize recreational cannabis while Utah and Missouri approved medical marijuana initiatives at the ballot box.