Shares of cannabis companies declined in early Wednesday, as investors were disappointed that a Democratic sweep failed to offset a boost from the referendum victory in a number of states.
ETFMG Alternative Harvest Exchange-Traded Fund MJ,
Premarket trading fell by 1.3%.
Among the more active US-listed shares, Tilre Inc. TLY
Aurora Cannabis Inc dropped 2.9%. ACB,
Shed 2.7%, Canopy Development Corp CGC,
2.8% and Chronos Group Inc. CRON,
Arizona, New Jersey, Montana and South Dakota voted to approve recreational marijuana sales to adults, and Mississippi voted to legalize medical marijuana.
Don’t miss: With Election Day in four states, recreational pot sales will soon reach one-third of Americans.
Meanwhile, the expectation that Democrats will seize majority control of the Senate is fading, as early results on Wednesday show Democrats have not been able to gain much ground.
Also read: Biden led Trump to presidential control and the US Senate is still in doubt.
MKM Partners analyst Bill Kirk wrote in a note to clients, “Although this result is still unknown. A Democratic sweep, favored by many cannabis investors, is very unlikely.”
The Marijuana ETF gained 12.5% on Tuesday, with a 0.6% gain for the S&P 500 Index SPX.
Expectations for a Democratic sweep rose.
On the bright side for pot investors, a Democratic sweep may not be needed to brighten the outlook for pot investors. Kirk said it is worth noting that Arizona appears on the ballot to be a “meaningful contributing factor” to Joe Biden’s chances of winning the cannabis state. (Biden led the state as of this writing but it was still close to calling the winner.)
“We believe politicians from both parties will notice its impact on voters and will be more likely to voice support for cannabis initiatives in the future.”