Shares in cannabis companies whipsawed this week, even more than broader stock markets, which saw larger than normal ups and downs.
Most cannabis stocks surged yesterday afternoon after U.S. President Joe Biden, at noon Pacific Time, one hour before stock markets closed, sent his first of a string of tweets about work he was going to do related to cannabis.
"Sending people to jail for possessing marijuana has upended too many lives – for conduct that is legal in many states. That’s before you address the clear racial disparities around prosecution and conviction. Today, we begin to right these wrongs," Biden wrote in his first tweet.
In a video released at 12:44 p.m. Pacific Time, Biden said that he was going to pardon convictions for Americans who have federal criminal records for cannabis possession. He also urged state governors to provide similar pardons for Americans who have state criminal records for possesssion. Finally, Biden said that he has told Secretary of Health and Human Services Xavier Becerra and Attorney General Merrick Garland to begin reviewing how marijuana is classified under federal drug laws.
ETFs that track cannabis stocks had been down on the day until Biden's tweets. The Alternative Harvest ETF (NYSE:MJ), for example went from being down on the day to being up 19.55 per cent at the close of trading.
Individual stocks' share price jumps were even more volatile. Tilray Brands (Nasdaq:TLRY; TSX:TLRY) went from being slightly down on the day to having its main U.S. listing up nearly 31 per cent.
Tilray, which earlier this year sold its former Nanaimo headquarters, then released a disappointing earnings report this morning. The company missed analyst expectations for revenue and profit in its fiscal first quarter, ended Aug. 31, and its main U.S. listing's share price dropped almost 19 per cent at the end of the day's trading.
Tilray said it lost US$65.8 million, or US$0.13 cents per share in the quarter, compared with a loss of US$34.6 million, or US$0.08 cents a share in the same quarter one year ago. Analysts were expecting a loss of US$0.07 per share, according to the financial data company FactSet.
Tilray's revenue in the quarter fell nine per cent to US$153.2 million, while analysts were expecting revenue to be US$155.9 million, according to FactSet.
Tilray was Canada's first legal medical-cannabis grower and it opened its Nanaimo facility in April 2014. Speculation that it would leave Nanaimo ramped up in late 2020, when the company announced plans to merge with Aphria Inc.
It now lists its head office as being split between Leamington, Ontario, and New York.
Other pot stocks were similarly volatile. Canopy Growth Corp. (NYSE:CGC; TSX:WEED) yesterday went from being down on the day before Biden's tweets to having its main U.S. listing's shares up 22.15 per cent. Those shares then plunged 25.6 per cent today, perhaps because investors feared that the company's business would, like Tilray, fall short of financial expectations.
Stock market indexes overall were volatile this week, with Monday and Tuesday marking the biggest two-day rally for the Dow Jones Index and the S&P 500 since April 2020. Stocks then gave up most of those gains but ended up on the week.
The Dow Jones Index rose two per cent on the week, while the S&P 500 rose by about 1.5 per cent, and the Nasdaq added about 0.7 per cent. The Toronto Stock Exchange was up by about 0.75 per cent, compared with last Friday's close.
