Plummeting stock prices and lack of federal action has soured investors
The marijuana industry is in a deep financial funk.
Stock prices have plummeted roughly 45 percent since mid-February, according to the AdvisorShares Pure U.S. Cannabis ETF, a popular gauge of the sector. Over the same time period, the broader S&P 500 is up about 20 percent.
“It’s got to be one of the worst performing asset classes in the United States, sadly,” said Morgan Paxhia, co-founder of Poseidon Asset Management, a cannabis investment firm.
One big reason for the financial doldrums is that Congress and the Biden administration have done nothing to ease marijuana restrictions, despite Democrats being in complete control of the federal government.
The latest blow: JPMorgan Chase’s decision to stop accepting some cannabis trades from brokerage clients, as first reported by Reuters on Tuesday. That comes on the heels of Credit Suisse Group making a similar announcement.
“The banks are seeing the same thing that I’m seeing, that there is no cannabis legalization coming in the next six to 12 months,” said Marc Adesso, an attorney with Saul Ewing Arnstein & Lehr who works on major cannabis industry deals.
It all adds up to a remarkable reversal from the start of the year, when optimism soared in the cannabis industry after Democrats won control of the Senate. Investors flooded into the industry. Cannabis behemoths raised billions in capital to bankroll expansion plans. Stock prices soared. [Read More @ Politico.com]
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