Illinois legalizes marijuana
Illinois became the most recent state to legalize recreational marijuana on Tuesday. The legalization of recreational cannabis was a campaign promise of Illinois Governor J.B. Pritzker, who believes that many families have been negatively affected by the war on marijuana. Further, the governor said that people of color have been disproportionately affected.
There is also a strong incentive for regulators to legalize marijuana due to the taxes they can collect on sales. Along with that, there is hope that when the legal channel for recreational cannabis becomes available, consumers can access safer cannabis as opposed to procuring it from illicit sources.
Can companies open shop?
This doesn’t necessarily mean that companies can now open their shops in Illinois to begin selling marijuana. Marijuana remains a controlled substance at the federal level. However, hemp, which contains low levels of CBD, is legal at the federal level. When you hear for example that Canopy Growth (WEED) and HEXO (HEXO) are talking about going to the US, it is more likely hemp-related products. Note that HEXO plans to enter eight states in the US by 2020. Read Why Oppenheimer Cut HEXO’s Rating for more analysis.
Despite these developments, the overall cannabis sector had a weak performance. The Horizons Marijuana Life Sciences ETF (HMMJ) lost about 14% in June. For more performance analysis, read How the Cannabis Sector Performed in June.