2023-08-16 20:59:47
Growing cannabis at home or collectively in special clubs or smoking a joint quite legally – this should be possible with the Cannabis Legalization Act. Image: dpa
The federal government’s plans to partially release cannabis as an intoxicant could raise old hopes on the stock exchange. But investors shouldn’t get carried away.
The sweet smell of a joint can be encountered in many German cities and not so big German cities. It smells of the forbidden. This will disappear in the future when the federal government partially approves cannabis as an intoxicant. Above all, cannabis manufacturers and their suppliers will benefit from this. As the legalization in Canada in 2018 and the legalization fantasies of 2022 in the USA have shown, such plans by a country have always been accompanied by great euphoria for cannabis stocks. Followed by an equally rapid disillusionment when expectations fell short of reality.
The back and forth between euphoria and disillusionment makes cannabis stocks very volatile. The North American Cannabis Index offers a good impression of how volatile the development in the industry is. It includes the largest cannabis companies by market capitalization. The first storm of enthusiasm about cannabis on the stock exchanges was in 2018, when the drug was legalized in Canada. This gave Canadian companies a head start. However, because other countries were slower to legalize, companies could not readily expand. So the flight was quickly over. At that time, the index fluctuated between $2,100 and $1,100. Users of the Internet portal Reddit are said to have been partly responsible for the price rally in cannabis shares at the beginning of 2021. Since then, the index has fallen to $226.
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