The Associated Press reported Thursday morning that sources told the AP that U.S. Attorney General Jeff Sessions will rescind the Obama-era policy not enforcing federal laws prohibiting the sale, possession and use of marijuana in states where marijuana is state-legal for either medical or recreational use or both.
The decision comes just days after the state of California kicked off recreational sales, following voter approval in the November 2016 elections. In all, recreational use of marijuana is state-legal in eight states and the District of Columbia and medical use is state-legal in 29 jurisdictions.
While the political and social fallout has yet to form fully, the equities markets have not wasted any time in battering the stocks of companies engaged in the marijuana business.
Here’s how stocks in our report of the largest marijuana companies are faring Thursday afternoon:
- Scotts Miracle-Gro Co. (NYSE: SMG) traded down 1.45% to $107.08.
- Canopy Growth Corp. (TSX: WEED) traded down nearly 7% to C$33.43.
- GW Pharmaceuticals PLC (NASDAQ: GWPH) traded down 1.09% at $133.00.
- Aurora Cannabis Inc. (TSX: ACB) traded down about 4.1% at C$13.55.
- Aphria Inc. (TSX: APH) traded down almost 8% at C$19.79.
- MedReLeaf Corp. (TSX: LEAF) traded down 6.9% at C$27.89.
- Insys Therapeutics Inc. (NASDAQ: INSY) traded down 14.4% at $11.45.
- CanniMed Therapeutics Inc. (TSX: CMED) traded down 5.5% at C$24.69.
- Sprott Inc. (TSX: SII) traded flat at C$2.49.
- Horizons Marijuana Life Sciences Index ETF (TSX: HMMJ) traded down 5.4% at C$22.07.
- ETF Managers Group’s ETFMG Alternative Harvest ETF (NYSEARCA: MJX) traded down about 4.6% at $36.08.
According to the AP report, Sessions’ new policy will permit federal prosecutors in jurisdictions where marijuana is legal to “decide how aggressively to enforce longstanding federal law prohibiting it.”
While that may appear to give federal prosecutors some room for judgment, the reality is that the boss wants the law enforced and failing to do so could be grounds for disciplinary action or termination.
In March of last year, Sessions told an audience in Richmond, Virginia:
The Cole Memorandum set up some policies under President Obama’s Department of Justice about how cases should be selected in those states [where marijuana is legal] and what would be appropriate for federal prosecution, much of which I think is valid.
At that time Sessions also indicated that the federal government doesn’t have the money to take over enforcement of federal anti-marijuana laws from state and local law enforcement agencies that have traditionally supplied the manpower.
While Sessions has been clear and consistent in his opposition to legalizing marijuana, it could also be possible that today’s statement, unless it comes with a mechanism that does not rely on state or local law enforcement officers, is just as toothless as the Obama-era Justice Department. It could just be the AG’s attempt to put his stamp of approval on the Cole Memorandum while at the same time saying he still hates the vile weed.