A potential shift in the political landscape is putting a spotlight on cannabis stocks. According to equity research firm Zuanic & Associates, the recent news that President Biden will not seek re-election has sparked a positive reaction in the cannabis sector.
Analysts at the firm point out that the possibility of Kamala Harris winning the Democratic nomination is seen as positive for cannabis stocks. They note that canopy growth Shares of the company (NASDAQ:) rose 17%, and other major licensed producers (LPs) saw an average gain of 9%, with the MSOS ETF up 5.7%.
Harris’s stronger odds against Trump, according to recent polls, reduce the risk of a “red wave” in November, Zwanick & Associates says. This is expected to boost Democratic voter turnout, which could further benefit cannabis stocks.
However, the firm says the path to federal cannabis rescheduling remains complex. Despite Harris’ optimistic outlook on cannabis reform, Zwanick & Associates warns that the path to rescheduling is fraught with obstacles.
They point out that the process could face delays from the Justice Department and the Drug Enforcement Administration. A final rule on rescheduling could still be reached before December 21, 2024, but “the hurdles are mounting.”
The research firm believes that Harris’ election against Trump is likely to intensify the debate over cannabis. They believe that while this could lead to a sharper focus on cannabis reform, it could also increase partisan risk. They feel that if Trump wins, cannabis stocks could face uncertainty as Trump is expected to maintain the status quo without rescheduling.
Overall, Zuanic & Associates believes a Harris win in November would be more beneficial to cannabis stocks than a Trump win, given Harris’ potential to promote rescheduling and other reforms.
