Why Trulieve Cannabis Stock Sank by 4% Today
Key Points
A group of American public legal officials expressed concern about current federal law covering hemp.
They feel that although it was legalized in 2018, it's only poorly defined in federal law.
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A new push to limit certain cannabis products by top American legal officials dampened the buzz of some marijuana companies on Monday. Among these was Trulieve Cannabis (OTC: TCNNF), which saw its share price wither by more than 4% that day. By contrast, the stock market as a whole did well, with the S&P 500 (SNPINDEX: ^GSPC) rising by 1.2%.
Real concern about fake products
The news pushing down the stocks of marijuana companies was disseminated on Monday. The previous Friday, a bipartisan group of 39 state and territory attorneys general wrote a letter to the U.S. Congress regarding the federal stance on hemp products.
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Hemp and marijuana are two varieties of the same plant species, but they differ in the amount of tetrahydrocannabinol (THC) they contain. This is the psychoactive compound that produces the marijuana high. Hemp contains little THC compared to its relative.
In the letter, sent to the chairs of the appropriations and agriculture committees of both the U.S. House of Representatives and the Senate, the attorneys general urged clarification of the term "hemp," in federal law. They also said they had concerns with hemp, which was legalized in 2018, but according to them is being "exploited by bad actors to sell recreational synthetic THC products across the country."
The costs of complying
Those officials also urged committee members to modify current policy to make the fake THC products unambiguously illegal. If successful, the effort could result in increased scrutiny on makers of hemp products -- like Trulieve -- who might face higher compliance costs as a result.
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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.
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