Why Curaleaf Stock Was Tumbling on Tuesday

Key Points

• A draft document on President Trump's desk recommends an initiative that would include emphasizing the dangers of substances like THC.

• To a degree, this counters recent legislative attempts at essentially legalizing marijuana.

• 10 stocks we like better than Curaleaf ›

Investors weren't getting much of a buzz from American cannabis stock Curaleaf's (OTC: CURLF) on the second trading day of the week. In late-session action, the shares had lost more than 3% of their value, on discouraging news about one man who can make a powerful push toward legalization if he chooses to do so. The S&P 500 (SNPINDEX: ^GSPC), meanwhile, at that point was down by only 0.7%.

Proposals on the table

President Donald Trump is reviewing a draft document detailing recommendations on promoting health in American youth, several media outlets reported that day. Among the suggestions is that the U.S. Surgeon General "will launch an education and awareness initiative on the impact of alcohol, controlled substances, vaping, and THC on children's health."

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THC is the psychoactive compound in cannabis that gets users high.

The language suggests that such an initiative would focus on the risks and potentially harmful effects of these substances. As current legislative efforts to reschedule marijuana are focused on a "rescheduling" of the drug that would make it de facto legal throughout the U.S., this document feels like a step in the opposite direction.

It is currently unknown if Trump has conducted his review. He has not yet commented on it.

Getting Trumped?

Although the president has leaned toward marijuana legalization, recently he has indicated a desire to leave it up to individual states to decide, rather than enact reform on the federal level. This would basically maintain the status quo, which is a patchwork of states that have enacted some degree of legalization, mixed with a handful that have kept the drug fully illegal.

This won't help the cannabis industry, which in my view can only improve significantly with de facto legalization, in addition to reform that allows it to directly access basic financial services.

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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.