U.S. midterm elections seen as potential positive for cannabis sector

Shares of cannabis stocks are in focus ahead of the United States’ midterm elections on Tuesday. ‘POSITIVE DRIVER’: In a research note on Thursday, Canaccord analyst Bobby Burleson said he views the elections as a positive near-term catalyst for the U.S. cannabis sector as the midterms are likely to benefit Democrats and see the approval of several state legalization measures. The analyst said Michigan and North Dakota are considering legalization of recreational use, while Missouri and Utah are considering legalization of medical use and recent polling points to the likely passage of the Michigan, Missouri and Utah measures. Burleson also said he expects gains for Democratic governerships during the midterms as well as the federal advance toward legalization to progress. The analyst contended that qualitatively, a Democratically controlled House shifts political capital toward federal legalization, while indirectly, the potential of a coming Democratic-led House could rouse efforts toward compromise on the stalled House version of the Farm Bill. In addition, Burleson noted that is widely expected that Attorney General Jeff Sessions will step down after the elections, which would be significant given his rescission of the Cole memo and his general hostility toward legalization. The departure may also create the opportunity for rescheduling of marijuana on the Controlled Substances Act, the analyst said. Burleson said he believes the midterms will be positive for the entire U.S. cannabis sector, but expects a lift for specific names including 1933 Industries, Charlotte’s Web, Ianthus/MPX Bioceutical, Liberty Health Sciences, MedMen Enterprises, Planet 13 and Trulieve Cannabis Corp. CANNABIS STOCKS: Publicly traded companies in the space include Aurora Cannabis (ACB), CV Sciences (CVSI), CannTrust Holdings (CNTTF), Canopy Growth (CGC), Cronos Group (CRON), General Cannabis (CANN), India Globalization Capital (IGC) and Tilray (TLRY). PRICE ACTION: CV Sciences rose 7.2% to $6.23, CannTrust Holdings fell 1.2% to $6.85, Cronos Group was down 1.4% to $7.95 and Tilray dropped 4% to $95.52 in late morning trading.