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The U.S. heads into another historical election, the outcome of which will have an effect on cannabis stocks.
With both major candidates, Donald Trump and Kamala Harris, supporting cannabis reform, investors are closely watching the sector. These past few days, volatility has taken the stage as many have decided to take profits from the recent rally.
However, Trump's recent rise in the polls might be adding complexity, as the market legitimately questions whether his pro-cannabis stance is genuine or merely a strategic move to gain votes.
Let’s look at how major cannabis stocks are responding to this uncertain political landscape.
Trulieve (OTC:TCNNF)’s stock saw a period of gains, followed by a sharp drop in recent sessions, likely driven by profit-taking and election-related uncertainty. The volume spike in this downturn indicates strong selling interest. The bearish MACD signal underscores a cautious sentiment taking over.
Chart created using Benzinga Pro
The AdvisorShares Pure Cannabis ETF (NYSE:YOLO), which represents a basket of cannabis companies, mirrors Trulieve's recent pattern, with a strong rise followed by a sharp decline. Increased volume on down days suggests that investors are tempering their optimism as the market appears hesitant to price in cannabis reform. The recent MACD crossover to bearish territory also reflects this hesitation.
Chart created using Benzinga Pro
The AdvisorShares Pure US Cannabis ETF (NYSE:MSOS) representing U.S.-based cannabis companies, also saw a strong rally followed by a sharp decline. Increased volume on the downturn highlights investor skepticism. Again, the MACD turning bearish underscores a shift from optimism to caution.
Chart created using Benzinga Pro
Tilray (NASDAQ:TLRY)’s stock has been relatively stable, showing a lack of strong momentum in either direction, which might just be consolidation. This range-bound movement normally reflects investor indecision as they wait for clearer signals. The stock is neutral regarding MACD and is building resistance around $1.65.
Chart created using Benzinga Pro
Ispire Technology (NASDAQ:ISPR) is seeing a sustained downtrend with selling pressure intensifying as election day approaches. The increased volume on down days and the bearish MACD signal indicate slight investor pessimism.
Chart created using Benzinga Pro
Scotts Miracle-Gro (NYSE:SMG) stands out with continued upward momentum and a bullish MACD, suggesting relative strength in the sector. Unlike more cannabis-focused stocks, Scotts' diversified product line provides a cushion and might be appealing to investors seeking stability.
It also speaks to the slight pessimism cannabis stocks are facing, which might be related to upcoming elections.
Chart created using Benzinga Pro
Read Also: Canada’s Cannabis Market Goes Cold, Pot Prices Hit Bottom: Why Top Producers Are Losing Ground
If we considered the sentiment of a Trump victory, parting from his momentum in current polls, then we might push forward the following hypothesis: despite Trump's recent statements supporting cannabis rescheduling, market behavior is suggesting skepticism. The downward trends in recent rounds suggest a link between a Trump potential victory and investors’ selling sentiments. Trump is still behind Harris in most polls but the gap is closing quickly.
While Trump's corporate tax cuts could benefit companies in general, one of the main problems cannabis companies face is 280-E, a burden that will be taken out of the corporations’ backs if cannabis is rescheduled. At this point, given the result of recent rounds, investors might be doubting Trump’s commitment to reform.
As the election day draws closer, cannabis stocks remain in a delicate balancing act, which investors would be wise to watch closely.
Cover: AI-generated image
