The Creso (ASX: CPH) share price has surged 30% higher to 13 cents this morning on US moves to decriminalise cannabis.
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The emerging cannabis industry has received another vote of confidence, after the United States House of Representatives passed a historic bill to end a federal ban on marijuana last Friday.
The proposal has yet to be signed into law. However it’s given a boost to Australia’s cannabis industry, including ASX-listed Creso Pharma Ltd (ASX: CPH). The Creso share price is surging 30% higher to 13 cents at the time of writing.
US Senate to vote on the new bill
The US House of Representatives on Friday voted on the Marijuana Opportunity Reinvestment and Expungement Act, popularly known as the MORE Act. The Act decriminalises cannabis and clears the way to erase non-violent federal marijuana convictions.
In the vote count, 228 voted in favour of passing it while 164 were against.
However, the bill will have to pass Senate approval before it’s enacted into law. Analysts have said the Senate is unlikely to approve the bill due to bipartisan disagreements on the issue.
If approved, the MORE Act will open a pathway for ownership opportunities in the emerging industry. Projections from a cannabis industry market research firm, Brightfields Group, estimate it to be worth around $19 billion in sales this year – in the US alone.
Recent United Nations (UN) landmark announcement
The trend toward normalising cannabis has been gaining ground globally. Last week, the UN announced a landmark decision to reclassify cannabis as a less dangerous drug.
That decision will see the UN Commission on Narcotic Drugs withdraw cannabis from Schedule IV classification. Schedule IV substances are considered the most dangerous and addictive drugs.
The UN said that cannabis would be reclassified as a Schedule I substance, which is the least restrictive drug classification.
Creso share price to benefit
In the wake of the UN ruling, Creso said it was extremely well-positioned to benefit, and that it would unlock multiple near-term opportunities. The Creso share price rose by 8% after that announcement.
Creso announced today the new development in the US also placed the company in a good position to capitalise on opportunities in the US market.
The company has an established global distribution network in the US that will benefit from the legislation. In addition, its Canadian subsidiary, Mernova, can scale up operations to meet potential demand from the US market.
The company says Mernova is a fully licenced 24,000 square-foot cultivation growing facility, and is ideally located to cater to both Canadian and US markets.
Creso co-founder and director Boaz Wachtel is optimistic about Creso’s future, saying:
This is a historic ruling that has the ability to create significant growth opportunities in our burgeoning industry.
It follows similar regulatory shifts in the European Union and from the United Nations that highlight public acceptance for cannabis and cannabidiol-derived products, is at an all time high.
The Creso share price has risen by more than 250% since 27 November, including the 30% price rise today. The company currently commands a market capitalisation of around $69 million.
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Motley Fool contributor Eddy Sunarto 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.