The ETFMG Alternative Harvest ETF (NYSEArca: MJ) ticked higher as three states successfully passed cannabis-related legislation following Tuesday’s midterm elections. MJ gained 1.31% as of 12:30 p.m. ET.
MJ was steadily rising ahead of the elections, creeping above its 200-day moving average after it, along with most U.S. equities, was racked by the October’s volatility.
Marijuana Legislation Goes 3-for-4
On Tuesday, four states–Michigan, Missouri, North Dakota, and Utah–had marijuana-related legislation open for voting.
State-by-state proposals:
- Michigan: Persons age 21 and older would be able to use marijuana, licensing laws for growers/retailers, local governments can decide whether to exclude marijuana businesses or restrict their operations, a 10% retail tax would be applied to marijuana purchases.
- Missouri: Qualifying medical conditions for marijuana use, state licensing and regulation for retailers, state constitutional changes that alter voting against marijuana laws that have already passed.
- North Dakota: Recreational legalization of marijuana, age requirements to purchase marijuana (over 21 years of age), expunging of criminal record convictions related to marijuana, and punishments for selling marijuana to individuals under the age of 21.
- Utah: Legalization of medical marijuana, specifications for marijuana use/consumption, and licensing of growers/retailers.
In the end, Michigan became the 10th state to legalize recreational marijuana, joining Washington, Oregon, California, Nevada, Colorado, Maine, Vermont, Massachusetts, Alaska. Medical marijuana usage passed in Utah and Missouri, but recreational marijuana use was defeated in North Dakota.
“In our view, these midterm results combined with a strong pipeline of upcoming catalysts should serve to drive a decoupling of valuation multiples for the U.S. cannabis sector to eventually reach a premium over Canadian LP peers,” said GMP Securities analyst Robert Fagan.
Democrats Win House
Election results went as political analysts planned with the Democrats gaining majority in the House of Representatives, while the Republicans maintained control of the Senate. Analysts posit that a more Democratic House would offer the least path of resistance for further marijuana-related legislation, such as the SAFE Act and STATES Act.
The SAFE Act would disallow the federal government from punishing banks from offering services to marijuana-related businesses where it is legal, while the STATES Act would effectively eliminate federal involvement altogether in any of the states’ marijuana laws. Since the latter is more all-encompassing, it would likely come under the most scrutiny.