Marijuana stocks in the U.S. have been on a rollercoaster ride over the past few years. The cannabis industry and investors are anxiously awaiting a crucial federal drug reclassification to reduce official risks associated with cannabis, despite several states independently taking steps in this direction. The long-awaited reclassification has been a source of anticipation for some investors who have held pot stocks at a loss for years, hoping for national-level action. As years went by without progress, investors began to lose faith in the possibility of federal reforms materializing.
The paranoia felt by investors may soon prove to have been unwarranted. This is because the long-awaited cannabis reforms may finally become federal law before election day 2024. This would likely ignite the cannabis sector once again. It is still too premature to party, but the time may be near.
Cannabis ETF Insights and Trends
Investors in the cannabis sector are closely monitoring developments related to federal drug reclassifications, as these policy changes could have a profound impact on the industry’s future.
ETFs like AdvisorShares Pure US Cannabis ETF (NASDAQ:MSOS) provide a comprehensive view of the cannabis market by tracking a basket of stocks of multistate cannabis operators. This ETF, being one of the oldest funds focused on cannabis, has the advantage of a longer track record, making it a valuable benchmark to assess the performance and journey of the cannabis sector.
By examining the price movements of MSOS, investors can gauge the market sentiment, investor confidence, and overall market trends within the cannabis sector, particularly in response to regulatory developments and shifts in the legal landscape. The journey of MSOS from its launch in 2020 to its current value offers insights into how the market has reacted to regulatory uncertainties and potential opportunities, reflecting the overarching narrative of the evolving cannabis industry.
During the three months after launch, the ETF shot up 119% peaking at $47.89. A bumpy ride down in price followed. Exactly a year ago the cannabis ETF was trading at $5.35. Anyone who had invested in MSOS along the way was surely in the red. Today, one year later, MSOS is trading at $9.47 a share. This is a 77% increase year-over-year. The climb was on renewed hope that a change in federal regulations, and the addition of new states to the recreational cannabis market, would soon provide a stronger tailwind for this and other stocks in the sector.
Within three months after its launch, the ETF skyrocketed by 119%, reaching a peak of $47.89 before facing a turbulent descent in value. A year ago, the cannabis ETF was valued at $5.35, leaving investors who had invested in MSOS at that time in a loss position. Presently, after a year, MSOS stands at $9.47 per share, marking a 77% increase compared to the previous year.
This surge was fueled by growing optimism surrounding potential changes in federal regulations and the prospect of new states entering the recreational cannabis market, which could provide a significant boost to this sector and related stocks.
The TipRanks Performance Comparison chart indicates a 57.44% decline in MSOS share value since the ETF’s launch.
Cannabis Support: The FDA and the White House
The cannabis sector’s recent upsurge in optimism springs from the Food and Drug Administration (FDA)’s proposal to downgrade cannabis from its strict Schedule I categorization to the more permissive Schedule III. This news, along with encouraging statements from senior officials, has been instrumental in boosting sentiment.
The FDA’s recommendation was unveiled in late August 2023, coinciding with a period where stocks in the sector began outperforming the market but fell short of previous peaks. The sector’s enthusiasm has reached new heights following President Joe Biden’s call for reclassification in his State of the Union address last month. Vice President Kamala Harris has even advocated for full marijuana legalization, amplifying the support propelling the current momentum in cannabis stocks.
Key Takeaway
In conclusion, amidst the growing momentum in the cannabis sector, exercising investor caution is essential. The cannabis sector has a history of getting ahead of itself. While the future of federal cannabis reform remains uncertain, the recent developments have reignited industry enthusiasm, sparking fresh interest and raising questions about the potential for further growth in marijuana stocks.
Will marijuana stocks continue to reach new highs? Investors can discover what the top industry analysts are saying about marijuana stocks by visiting TipRanks.
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