A Kentucky Congressman has recently been criticized for buying up thousands of shares of cannabis industry stocks just days before he voted to legalize weed.
On December 3 of last year, the House of Representatives voted to pass the Marijuana Opportunity Reinvestment and Expungement (MORE) Act, a historic bill that would end the federal prohibition of cannabis. But right before this vote, Rep. John Yarmuth (D-KY), chair of the House Budget Committee and one of the bill's co-sponsors, invested heavily in weed industry stocks, according to a filing uncovered by Popular Information.
On November 5, Yarmuth purchased between $1,000 and $15,000 worth of stocks in three companies: Canopy Growth Corporation, Aurora Cannabis, and Tilray. And this February, the lawmaker doubled down on his investments, purchasing another round of shares in these three companies. Rep. Brian Mast (R-FL), one of only five Republicans who voted in favor of the MORE Act, also reportedly bought between $15,000 and $50,000 of Tilray stock last November.
Craig Holman, government ethics expert with Public Citizen, told Popular Information that this pattern of investing “certainly doesn't look good.” Holman added that Yarmuth's decision to buy stocks that could be directly impacted by legislation he's sponsoring makes it seem like he is "using his official office for personal gain."
These transactions might seem shady, but they are not illegal. The 2012 STOCK Act makes it illegal for lawmakers to use inside information to trade stocks, but does not prohibit the purchase or sale of individual stocks.
"Congressman Yarmuth purchased the stocks after seeing four states legalize the use of recreational marijuana in the November elections,” said Christopher Schuler, Yarmuth's communications director, to Popular Information. “He was transparent about it and followed all House Ethics and financial disclosure rules."
It's also important to consider the fact that the weed businesses Yarmuth and Mast invested in are all Canadian companies, and weed has been legal in Canada for years now. American cannabis businesses are prohibited from trading on the US stock market, but weed businesses in other countries are free to do so. It's difficult to predict exactly what would happen to the value of Canadian stocks if American weed businesses were legally able to go public.
Canadian weed stocks have grown in value since the House passed the MORE Act, though. Since last November, Tilray's stock has climbed from $7.82 a share to $26.29 a share. The weed industry market is extremely volatile, however, and it's still considered to be a risky investment. Earlier this month, the infamous WallStreetBets Reddit group set their sights on the cannabis industry, causing shares to spike to their highest-ever prices, only to crash hard a day later.