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United States Attorney General Jeff Sessions put the legal marijuana industry on notice after saying that he would rescind a policy that protected marijuana businesses in states where it is legal. While this development is concerning, Sessions’ decision was criticized by several high-profile Republican lawmakers.

Colorado Republican Senator Cory Gardner said he would hold up the confirmation of future Department of Justice staff unless the Sessions policy was changed. U.S. Attorney for the District of Colorado Bob Troyer said that there would be no changes to enforcement in the state because of this federal policy shift.

The Cannabis Rally Comes to a Halt as Stocks Sell-off

Prior to this announcement, the cannabis sector was in the middle of a major rally but that came to a quick halt after this development. This weakness was industry wide and cannabis stocks not levered to the U.S. market were also under considerable pressure.

We were surprised to see Canadian cannabis stocks trade lower on this news since the large licensed marijuana producers are not focused on the United States marijuana market.

A Catalyst for Canadian Licensed Producers?

This development is actually a catalyst for the Canadian cannabis industry and we remain bullish on this opportunity. Canada has become a global cannabis leader and the country is capitalizing on opportunities in Germany, Denmark, Australia, Chile, Colombia, Israel, and many more.

In late 2017, Canopy Growth Corp (WEED.TO) (TWMJF) received a $250 million investment from Constellation Brands (STZ) and this Canadian licensed marijuana producer has significant exposure to legal markets in Germany, Denmark, Australia, and Chile.

Shares of Canopy Growth fell 10% yesterday and we are monitoring this pullback. During the last month, WEED.TO rallied approx. 80% and this correction makes the shares look much more attractive. We are monitoring Canopy Growth and remain bullish on the company’s long-term outlook.