The Green Market Report Cannabis Company Index recovered following a challenging start to the year. After falling 21.9% in the first quarter, the Index on average gained 20% for the second quarter of 2018.
If you’ll recall at the beginning of the year, U.S Attorney General Jeff Sessions rescinded the Cole Memorandum and stocks responded accordingly with many investors taking profits gained in 2017. There was a great deal of fear that the Department of Justice (DOJ) would begin cracking down on the cannabis industry and shareholders wanted no part of that. As it turns out, the DOJ was more bark than bite and very little punitive action has taken place.
The second quarter began a slow climb back up the charts as shareholders began to return to the market comforted by the lack of movement by the DOJ. The quarter was significant for high profile IPO’s like MedMen Enterprises, The Green Organic Dutchman, and Green Thumb Industries. Adding to the excitement, the major stock exchanges in the U.S. opened their doors to Canadian cannabis companies. The NASDAQ welcomed Cronos Group and the New York Stock Exchange-listed Canopy Growth.
Canada’s final legislative approval for legalized adult-use marijuana in June was met with relief and it was capped off by Prime Minister Trudeau’s setting October 17, 2018, as the goal date for sales. Since so many Canadian cannabis companies have built business strategies around this market, it was encouraging to get a green light with a set date. Uncertainty is always unsettling and these final pieces to the legalization puzzle were finally put in place.
The medical market also received the expected good news for GW Pharmaceuticals from the FDA, which approved its cannabinoid drug Epidiolex. This drug will be used to treat rare forms of epilepsy called Dravet Syndrome and Lennox Gastaut. It uses real cannabis plants and is not a synthetic compound. The company had been achieving all of its drug trial study goals and there seemed to be no reason for the FDA to have turned the company down. So, even with positive expectations, getting the final word was heartening.
Still, the FDA made it clear that its approval did not change the scheduling status for cannabis and that the agency would send a recommendation to the DEA, but did not say what that recommendation would be. GW Pharma was more clear and adamantly stated that rescheduling would occur within 90 days.
This approval has many in the cannabis industry feeling that there will be some big moves for the rescheduling question as a result of the FDA’s approval. Even though there really is no guarantee of this happening, most feel that there is no turning back now for cannabis and a change in its classification is inevitable.
You can read the entire Index Summary here.