Cannabis Watch: Cannabis stocks surge again after Michigan votes to legalize recreational pot

Shares of cannabis companies traded broadly higher Wednesday, as U.S. midterm elections helped usher in a green wave, with Michigan voting to legalize recreational pot and other states supporting medical marijuana.

The ETFMG Alternative Harvest exchange-traded fund

MJ, +1.08%

jumped 1.1%, with 31 of 37 components trading higher, putting it on track for a seventh straight gain. The sector tracker has now run up 18% during its win streak.

The Horizons Marijuana Life Sciences ETF

HMMJ, +0.73%

rallied 2.2%, also headed for a seven-day win streak.

Among the most-active stocks, Aurora Cannabis Inc.

ACB, +1.35%

rose 0.5%, Canopy Growth Corp.

CGC, -0.66%

slipped 1.1%, Cronos Group Inc.

CRON, -0.22%

eased 0.7%, Tilray Inc.

TLRY, +5.67%

ran up 5.1% and MedMen Enterprises Inc.

MMNFF, +0.84%

tacked on 2.2%,

Michigan became the 10th state — and the District of Columbia — which voted to legalize marijuana. Although South Dakota voted down a measure to legalize pot, Missouri and Utah voters supported legalizing it for medicinal use.

But that’s not all. Democrats winning a majority in the House of Representatives for the first time since cannabis liberalization began marks “a fundamental shift in the U.S. legislative landscape which could usher in a period of positive cannabis reform,” GMP Securities analyst Robert Fagan wrote in a note to clients.

“For instance, Dems will now gain majority control of the powerful House Rules Committee, which previously acted as a dogged gatekeeper of positive cannabis reform for the past 2 years under the oversight of anti-cannabis Republican Pete Sessions,” Fagan wrote, with Sessions losing his House seat from Texas to Democrat Colin Allred.

Don’t miss: Opinion: Marijuana wins in the midterm elections, but the biggest prize is still ahead.

In other pot stocks, shares of Toronto-based Namaste Technologies Inc.

NXTTF, +1.65%

  gained 3.3% after the company said its Cannmart Inc. subsidiary signed an agreement with AgMedica Bioscience Inc. to buy medical cannabis from AgMedica to sell on Cannmart’s online platform. AgMedica is a licensed producer of medical cannabis under the Access to Cannabis for Medical Purposes Regulations (ACMPR), which holds cultivation and sales licenses.

MariMed Inc.’s stock

MRMD, +3.10%

rallied 4.2% after the Massachusetts-based manager of cannabis facilities said it named Charles Finnie, most recently a senior research analyst at Roth Capital Partners, its chief strategy officer, to head up its merger-and-acquisitions, investment and investors relations strategies.

Also read: Everything you need to know about CBD, the cannabis elixir that doesn’t get you high.

Elsewhere, shares of GW Pharmaceuticals PLC

GWPH, +2.40%

rallied 2.9%, Aleafia Health Inc.

ALEAF, -6.76%

fell 8.2%, Green Organic Dutchman Holdings Ltd.

TGODF, -7.65%

shed 4.7%, Hexo Corp.

HYYDF, +1.54%

edged up 0.3% and Supreme Cannabis Co. Inc.

SPRWF, +4.96%

advanced 2.5%.

The ETFMG ETF has now run up 30% over the past three months and the Horizons ETF has soared 36%, while the SP 500 index

SPX, +1.53%

has lost 2.4%.

“In our view, these midterm results combined with a strong pipeline of upcoming catalysts should serve to drive a decoupling of valuation multiples for the U.S. cannabis sector to eventually reach a premium over Canadian LP peers,” GMP’s Fagan wrote.

Check out: MarketWatch’s comprehensive coverage of the cannabis sector, including profiles of a number of key players, in one place.

Tomi Kilgore is MarketWatch’s deputy investing and corporate news editor and is based in New York. You can follow him on Twitter @TomiKilgore.

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