Why investors in Aurora Cannabis, Tilray, Hexo and Sundial are panicking today

What happened

Call it a “Reefer Madness” moment. In a flashback to the classic 1936 anti-drug film, marijuana investors today were frightened by reports of health problems among cannabis users – and it’s wreaking havoc on marijuana stocks. .

At 1:55 p.m. EDT trading:

So what

Separate articles posted on major news sites over the past two days included:

• Tell stories of children eating cannabis gummies and suffering from overdoses (CBS);
• Citing a study linking a growing incidence of schizophrenia to “problematic marijuana use” (CNN);
• and citing an anti-marijuana activist calling it a “highly processed product” which is a source of “cannabis-induced psychosis” (Fox News).

Now what

These negative media mentions come at the same time that two competing marijuana legalization bills are making their way to the United States Senate and House, respectively – and they come at the same time that President Biden wonders if he will sign (or not) any legalization bill that ultimately receives votes from Congress.

The harsher the criticism, the more likely it is that the president will ultimately decide that he not sign a bill legalizing marijuana. And seeing as that seems to be the direction he was leaning in before those headlines, I’d say the odds of cannabis becoming legal federally have worsened considerably.