Cannabis stocks took a nosedive on Thursday with many of the sector’s best performers a day earlier surrendering those gains, as the relentless buying in recent weeks amid growing hopes for reforms of strict U.S. laws came to a screeching halt.
While some of the recent buying appeared to be driven by an investor group on Reddit that had sent the stock of videogame retailer GameStop Inc. to record heights in recent weeks, “we’ve also had record flows into exchange-traded funds and mutual funds in the last few weeks,” said Bauer. With more states voting to legalize in November ballots, and New York expected to come on board this year and create a market that will rival California, investors are looking at the sector with renewed interest.
Ihor Dusaniwsky, managing director of predictive analytics at S3, said bearish bets on Tilray have actually increased this year. The value of shares shorted was $1.33 billion, up more than $1 billion since the company announced its merger with Aphria in December. Senate Majority Leader Chuck Schumer and two of his Democratic colleagues have pledged to make cannabis legislation a key part of the current Congress and have promised to release legislation in the near term. That has raised hopes for at least safe-harbor banking language, that would allow companies access to banks and crack open the capital markets.