Pot stocks dive as Florida rejects legalization of recreational marijuana

11:55 am Wednesday, November 06th, 2024

(Reuters) -Shares of pot companies slid on Wednesday after a ballot measure to legalize the recreational use of marijuana in Florida failed to get the required majority to pass, even as the firms invested millions in a campaign to tap the lucrative market.

Toronto-listed shares of Canopy Growth and Trulieve Cannabis tumbled 20.4% and 44.2%, respectively.

Tilray Brands’ shares declined more than 11%, while the U.S.-listed shares of SNDL and Cronos Group fell 13.8% and 7.2%, respectively.

ETF AdvisorShares Pure US Cannabis plunged 24.1%.

Florida was touted as a very attractive market. An estimate from cannabis analytics company Headset had indicated $4.9 billion to $6.1 billion in adult-use sales during the first year of implementation.

The passage of Amendment 3 would have legalized the sale of marijuana for recreational use to adults 21 years of age and older from medical marijuana treatment centers and other state-licensed entities.

The initiative received more than 55% of the votes in favor but fell short of the 60% majority needed to pass.

Twenty-four U.S. states have so far legalized the recreational use of cannabis, though it continues to be illegal at the federal level.

In 2016, Florida voters passed a constitutional amendment allowing medical marijuana in the state.

Major pot firms had made substantial contributions to Smart & Safe Florida, the group advocating for the passage of Amendment 3.

The focus now shifts to efforts to reclassify marijuana use as a less serious federal offence. President-elect Donald Trump has also publicly supported marijuana reforms and legislations in the months leading up to the election.

ATB Capital Markets analyst Frederico Gomes said if marijuana use is reclassified as a less serious federal crime, it could more than offset any effects of the failure to pass the amendment.

(Reporting by Mrinalika Roy and Sourasis Bose in Bengaluru; Editing by Abinaya Vijayaraghavan and Sriraj Kalluvila)