Impact of Biden administration on cannabis industry: Canopy Growth CEO
Shares of major cannabis growers are skyrocketing again after news of the official start of a transition period for Joe Biden’s presidential administration. The surge is driven by expectations that the new administration will loosen regulation of the industry, as well as the fact that more US states will legalize the sale of recreational marijuana..
Canopy Growth climbed 6%, Aurora Cannabis rose 25% and Tilray jumped 14% in early trading on Tuesday. Other cannabis stocks traded on the open market include global cannabis leaders such as Curaleaf, Aphria and Cronos, which have been heavily invested in tobacco giant and Marlboro owner Altria. Their stock spikes followed a broader market rally on Tuesday..
Earlier this month, voters in Arizona, Montana, New Jersey, and South Dakota allowed cannabis use for adults, bringing the total number of states approving its use for this purpose, reached 15.
Industry leaders have publicly stated that they are happy with the election results. The CEO of Canopy, backed by Corona’s owner Constellation Brands, was particularly optimistic about what changes in the political landscape could mean for the industry..
«We believe Biden’s victory is an important step towards federal-level cannabis in the US market through decriminalization and the abolition of prison sentences.», – said the CEO of Canopy David Klein during a recent conference call with analysts.
«The ballot results clearly demonstrate that support for legalizing adult marijuana is geographic and party-wide and supported by a majority of Americans. Legal marijuana is becoming the American norm, he added. – This is likely to increase pressure on Congress to implement major federal marijuana reform in the near future».
Despite the optimism, the industry regularly faces obstacles at the federal level. This will happen again if the Republicans maintain a majority in the Senate after the Georgia elections in January..
Senate led by a Republican Mitchum McConnell would mean that cannabis legislation will remain inactive even under administration Joe Biden.
«Mitch McConnell is the speaker “no” one-man machine, – said John Hoodak, cannabis policy expert and deputy director of the Brookings Institution. “That’s what [he] doesn’t like. He sees no political benefit here».
Bad for the industry, with industry leaders say there is an urgent need to address key regulatory gaps for businesses that operate under government legal systems despite trafficking in a federally illegal product..
Cannabis company executives say they have a hard time getting bank financing or traditional financing because they are subject to the 1980s tax law designed to prosecute drug dealers, find it difficult to insure their businesses, and are not eligible for federal relief in natural disasters and emergencies.