Marijuana Index Plunges as Justice Department Repeals Obama’s Lax Marijuana Policies
Cannabis investments took a nosedive Thursday after U.S. Attorney General Jeff Sessions repealed former President Barack Obama’s relaxation of marijuana prosecution. The decision ended nearly a year of speculation about whether the Trump era would continue extend the former administration’s lax marijuana policies.
Sessions Reaches Decision
In a one-page letter, Sessions called the Obama-era guidance “unnecessary,” and said he would allow U.S. attorneys to enforce cannabis laws more aggressively. The renewed pledge to fight the cannabis industry extends to users as well as traffickers of the green plant.
According to The Wall Street Journal, the Attorney General was worried that the former administration’s guidance created “a safe harbor for the marijuana industry to operate” in certain states where the plant enjoyed more lax laws.
Sessions added the following in a statement:
“It is the mission of the Department of Justice to enforce the laws of the United States, and the previous issuance of guidance undermines the rule of law and the ability of our local, state, tribal and federal law-enforcement partners to carry out this mission.”
Prior to Sessions’ decision, the Trump administration had been purposely opaque about the growing tension between federal and state laws. A slew of U.S. states voted to allow recreational cannabis during the 2016 election, with several others considering a referendum of their own on the matter.
California has vowed to fight the federal crackdown on marijuana, and have instead pledged to uphold its own version of the law. The state is expected to be one of the major bellwethers of the North American cannabis sector, which many argue can become a generational investment opportunity.
That being said, the decision made by Sessions gives U.S. attorneys, the top federal prosecutors in their districts, more power to pursue marijuana-related offences.
Marijuana Index Tanks
Investors were understandably shaken by Sessions’ remarks on Thursday, with cannabis stocks declining across the continent. The North American Marijuana Index, which tracks the industry’s top performers in both Canada and the United States, declined 11.2% to 304.78. The index has 35 constituents representing various sub-industries. Marijuana investments reached record highs earlier this week.
The U.S. version of the index suffered the biggest loss, with 15 constituents reporting a loss of 21.3%. The U.S. Marijuana Index closed at 83.19, its lowest in a week. Meanwhile, the Canadian Marijuana Index declined 6.4% to 889.85.
Canada’s marijuana sector faces a much more favorable outlook as the federal government prepares to legalize recreational cannabis this July.
Featured image courtesy of Shutterstock.