Cannabis is a rapidly emerging and growing market due to high customer demand. However, for the first time all year, marijuana stocks see a decline.
Tuesday, various Cannabis stocks traded higher amidst losses due to regulators.
The ETFMG Alternative Harvest ETF MJ, +4.68% ran up 3.3% in afternoon trade, with 31 of 36 components trading higher. This is after the first cannabis exchange-traded fund shed more than 13% of its value last month, which was almost double the decline of the broad-based S&P 500. The latest trade puts the ETF on track to snap a five-session losing streak in which it tumbled 10% to close Monday at a five-month low.
The Horizons Marijuana Life Sciences ETF HMMJ, +4.39% shot up 1.6%, with 40 of 57 components gaining ground, after an 11.3% loss in the past five days.
The gains come as the S&P 500 index SPX, +2.14% rallied 1.8%, after declining 2.9% the past five sessions, and the Dow Jones Industrial Average DJIA, +2.06% jumped 458 points, or 1.8%, after losing 766 points over the previous five days.
Cannabis has seen impressive growth as more states like Illinois—recently passed a bill to legalize adult use of cannabis—are starting to accept marijuana as a non-threatening and life-saving drug. Additionally, Alabama passed a bill to open the way for legalizing medical marijuana.
However, medical marijuana remains to be a market riddled by legislation and regulators as it’s still a relatively new market and both regulator and business are finding the middle ground on the establishing industry.
On Monday, the marijuana sector extended its selloff after the U.S. Food and Drug Administration’s Friday hearing on cannabis and cannabidiol, the compound extracted from the cannabis plant that doesn’t give users a “high” also known as CBD, concluded without a clear-cut goal for standardization or evidence of health benefits and safety.
CBD mainly faced problems regarding FDA certification since CBD is a consumable cannabis product or an edible.