| Like many other Americans, I took up a few new hobbies following the onset of the COVID-19 pandemic.
One of my diversions was investing in stocks, and I quickly became an expert: buy low, sell high—ha! Such a simple concept, I thought.
Bull markets in the latter half of 2020 and much of 2021 had me feeling like a shark. I even recommended some cannabis stocks to a friend of mine in spring 2021 after an industry CEO told me he believed his company’s shares were extremely undervalued at the time.
That company’s stock value has fallen roughly 97% since June of 2021, dipping well below a dollar per share. So much for my expertise.
But plummeting stock prices appear ubiquitous across the industry and beyond.
As Cannabis Business Times contributor Raj Chander wrote this week, stock prices have “suffered a knockout blow” in 2022. One of Canada’s biggest producers, Canopy Growth’s stock price has tumbled from around $20 in July 2021 to less than $3 this month on the New York Stock Exchange, he reported.
Nonetheless, I felt the urge to offer some more trading advice to a couple of my buddies this past week leading into the anticipated filing of Senate Majority Leader Chuck Schumer’s federal legalization bill—the Cannabis Administration and Opportunity Act (CAOA). I had hoped to capitalize on some short-term gains for the week.
A few of the companies I follow experienced rises of more than 20% from opening bell on Monday, July 18, to their peaks at midday on Wednesday. But Schumer’s bill didn’t get filed until the following day, and many cannabis stocks had already begun moving downward, a trend that largely continued until closing bell on Friday.
“Although we see the long-awaited introduction of CAOA as another positive sign for eventual federal cannabis reform, the Democrat-proposed bill will have a tough time passing the Senate,” Matt Hawkins, the founder and managing partner at cannabis investment firm Entourage Effect Capital, said in a statement provided to CBT.
As another industry trader put it, there doesn’t seem to be much faith in federal legalization happening any time soon given recent market reactions.
-Tony Lange, Associate Editor
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