As the coronavirus (COVID-19) pandemic continues to spread, more and more states in the U.S. decide to declare cannabis an “essential” good, just like basic groceries and traditional pharmaceutical medications. Interestingly, a majority of Americans seem to agree with these decisions.
Most Americans (53%) believe medical marijuana dispensaries should be considered essential services.
Democrats (62%) are more likely than Independents (52%) and Republicans (43%) to say this.
— YouGovUS (@YouGovUS) March 25, 2020
But, while states are being pretty weed-friendly, the federal government maintains its anti-pot stance, excluding marijuana companies from its $2 trillion economic stimulus bill – which did include hemp.
David Culver, VP of Government Relations at Canopy Growth Corp (NYSE: CGC) commented on the issue, arguing “cannabis companies need and deserve the same economic relief extended to other industries.”
Now, despite the lack of federal support, cannabis companies have been thriving in recent weeks, with most stocks up considerably, as sales hit record highs amid the coronavirus outbreak. So, why are so many of them, from Leafly to The Flowr Corporation (TSX.V: FLWR) (OTC: FLWPF) to The Green Organic Dutchman Holdings Ltd. (TSX: TGOD) (OTC: TGODF) been firing its employees in bulk?
“It’s true that many cannabis companies have been laying off employees lately,” said Green Market Report’s Debra Borchardt. “Is that really due to the virus or is the virus just cover for poor management decisions?
“Several dispensaries have reported big increases in sales, so it’s hard to unpack who is really struggling. What we do know is that employees laid off during a crisis with little severance pay are the ones who are really struggling.”
As mentioned above, cannabis stocks had a strong week nonetheless. Over the last five trading days:
- ETFMG Alternative Harvest ETF (NYSE: MJ) gained 24.7%.
- AdvisorShares Pure Cannabis ETF (NYSE: YOLO) rose 23.2%.
- Cannabis ETF (NYSE: THCX) spiked 28.3 %.
- Amplify Seymour Cannabis ETF (NYSE: CNBS) traded up 22.2%.
- SPDR S&P 500 ETF Trust (NYSE: SPY) closed the period up 10.75%.
Two big Canadian cannabis companies had especially good weeks, price-action wise: Tilray Inc (NASDAQ: TLRY) closed the week up almost 150%, while Aurora Cannabis Inc (NYSE: ACB) posted gains of more than 41%.
While reasons were not totally clear, sources pointed toward a sector rebound, wider economic recovery, and “speculation that states could accelerate legalization as a way to recoup losses.”
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