Ever since White House press secretary Sean Spicer said last week to expect “greater enforcement” with respect to how the federal government handles legal marijuana, stocks for companies connected to the cultivation and sale of medical and recreational marijuana have been in a downward spiral, according to the latest report from CNN Money.
Across the board, pot investors are apparently panicking over the Trump Administration’s forthcoming crackdown on the cannabis industry, so much that even those organizations whose primary business is simply to build and lease property to pot growers have taken a substantial hit since last week.
The price per share for Innovative Industrial Properties (IIPR) dropped 5 percent the day following the White House’s comments regarding legal marijuana, and the stock is now 8 percent lower than it was a week ago.
CNN’s report shows that penny stocks have also taken a dive since Spicer insisted that the Department of Justice was about to bring down the hammer. Companies like Weed Inc. (BUDZ), Medical Marijuana (MJNA), Hemp Inc. (HEMP), GrowLife (PHOT) and Pineapple Express (PNPL) aslo all took a dive last week.
There is a distinct possibility that investors will attempt to retool their portfolios by only investing in companies associated with medical marijuana. That’s because the White House has given every indication that it will allow the medical sector to continue operations, while putting the brakes on businesses catering to the recreational side.
"The president understands the pain and suffering that many people go through who are facing especially terminal diseases and the comfort that some of these drugs including medical marijuana can bring to them," Spicer said on Monday. “I think I was clear that there is a big difference between the medical and the non-medical.”
Some analysts predict that investors could still shy away from medical marijuana because the industry will not be as lucrative without recreational sales.
Unfortunately, if the stock drops of the last week are any indication of future results, the experts might not be too far off base.
Although states have the freedom to legalize marijuana, Trump’s Department of Justice can still bar businesses from engaging in the cultivation and sales of marijuana – preventing any kind of a real industry from being created.
It is this level of uncertainly that has the investment community waiting to see what happens next on this issue before sinking any more money into what was only just recently seen as an up-and-coming market.