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Marijuana has been released this week: Canada legalized recreational use, the White House may look to federal cannabis reform after the midterm elections, and the industry saw a $ 682 million merger.
While the cannabis stock market has dropped to a 1
The stock market splits between retail investors and individual investors into equities – and institutional investors.
Retail investors have been enthusiastic about cannabis-related stocks, most of which are listed in Canada, with a few cross -listed on US exchanges. "TD Ameritrade CEO Tim Hockey told CNBC early this year.
The excitement is a result of interest in the products, whether for medical or recreational use – estimated to be 50 million people. "That's a real market," said Jon Trauben, a partner in Altitude Investment Management, which focuses on cannabis companies.
Cannabis companies that have gone public include penny stocks as well as shares approaching $ 150 for the two biggest names, Tilray of Canada and GW Pharmaceuticals, which is based in the UK
There are increased corporate interest in cannabis companies. Bloomberg reported that it is looking for investing in cannabis-infused drinks. Beer, wine, and spirits Constellation Brands invested $ 191 million last year in Canadian company Canopy Growth and added an additional $ 4 billion to raise its stake to 38 percent.
However, institutional investment has been low. Although the upside is attractive, the regulatory and legal issues are considerable. In the U.S., marijuana is still listed as a Schedule 1 drug, which means the federal government considers it to be "currently not used and a high potential for abuse." Pot's company includes LSD, peyote and heroin.
These are legalized cannabis products that are technically in conflict with federal law. The Rohrabacher-Blumenauer Amendment prohibits the Department of Justice from using any funding to enforce the Controlled Substance Act. Congress must annually renew the commission and currently they have done so through Dec. 8.
The law does not prevent the Justice Department from interfering with recreational use, even if legalized by a state. Nor does it ensure that companies in the U.S.
A change in direction by the federal government, as hinted at by the White House, could potentially turn this around and open the door for big influxes of money from institutions.