What happens in the US tends to have a big impact on ASX shares. Which is why ASX cannabis shareholders are cheering the US elections.
The post Why ASX cannabis shares are cheering the US elections appeared first on The Motley Fool Australia. –
ASX shares related to sustainable energy aren’t the only green companies likely to get a boost from the blue wave that swept through the US elections.
ASX cannabis companies could also receive some fresh tailwinds.
How the Georgia election tipped the scales for pot stocks
With Democrats – team blue – winning the runoff Senate election in the US state of Georgia last week, President-elect Joe Biden will effectively have control of both houses of Congress for the next 2 years. (That’s when midterm elections will be held, potentially changing the balance of power.)
And the Democrats have largely been more proactive in pressing for the legalisation of medicinal and recreational cannabis on a federal level.
According to Oren Shuster, CEO and co-founder of IM Cannabis Corp, which operates in Germany, Israel and Canada (quoted by Bloomberg):
I think that now, post-Covid, and with this Democratic dominance in the U.S. government, we will start to see positive movement in the approach to U.S. legalization — and that is something that will support global legalization.
What about ASX cannabis shares?
The Cann share price is off to a strong start in 2021, up 8.3%. Over the past 12 months, though, Cann’s share price is still down 39%.
The Creso Pharma share price has been an even stronger performer in 2021, and over the past year. Creso shares are up 31.7% so far in 2021 and 48% higher over the past 12 months.
In a release to the ASX on Friday, Creso reported that the legal US cannabis market alone is forecast to be worth US$130 billion (AU$169 billion) by 2024. The company noted that, “[r]ecent Democratic election campaigns have been run on the promise of near term cannabis policy reform.”
Those policies include the Marijuana Opportunity Reinvestment and Expungement (MORE) Act. The MORE Act would leave the status of marijuana up to the states, decriminalising it on a national level and expunging certain marijuana related federal felony convictions. This would also likely see greater interest from many retail and institutional investors who’ve been hesitant to invest without some greater legal clarity.
Addressing the blue wave election results, Creso Pharma’s non-executive chairman Adam Blumenthal said:
The recent election result is a historic moment for the cannabis industry in the USA and these developments leave Creso very well placed to capitalise, should cannabis ultimately be decriminalised in the US through the passing of the MORE Act.
The Creso share price is up 0.9% in late afternoon trading while Cann shares are up 1.6%. The wider All Ordinaries Index (ASX: XAO), meanwhile, is down 1.0% for the day.
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Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
The post Why ASX cannabis shares are cheering the US elections appeared first on The Motley Fool Australia.