The S&P/ASX 200 Index (ASX: XJO) has had a pretty flat day today to cap off the week. By the market close, the ASX 200 had fallen 0.69% to 5,928.2 points. However, one sector fell a lot worse today than the broader market, a sector with a green tinge to it. Yes, I’m talking about ASX cannabis shares.
By the end of the day, Cann Group Ltd (ASX: CAN) led the falls, down 4.69% to 3.05 cents per share.
THC Global Group Ltd (ASX: THC) wasn’t far behind with a 4.17% slide to 23 cents a share.
Elixinol Global Ltd (ASX: EXL) was also feeling the pain, down 3.33% to 14.5 cents per share.
And Althea Group Holdings Ltd (ASX: AGH) was 2.27% lower at 43 cents a share.
So what was giving the market red eyes today in this space? Far from the, um, highs of a few years ago, today seems to be giving investors another ounce of regret.
NZ referendum induces investor paranoia
We can probably put today’s negative moves in the cannabis sector down to the newly released results from the referendum that New Zealand held recently to legalise recreational cannabis use. The referendum was held at the same time as the New Zealand parliamentary elections a fortnight ago (in which the Labour Party’s Jacinda Ardern won a landslide victory and a rare majority government), but results are only being released today.
According to reporting from the aptly-named Vice.com, the New Zealand cannabis referendum was not successful, with the preliminary count showing 53.5% opposing legalisation. The reporting suggests that unless late vote counting heavily favours the ‘Yes’ column, the prospects of legalised marijuana in New Zealand are up in smoke, at least for now. It doesn’t look like there will be a purple haze of celebration across New Zealand tonight.
On a side note, a separate referendum to legalise voluntary euthanasia has been successful.
What does this mean for ASX cannabis shares?
Well, this isn’t good news to be sure. A legalised market for recreational cannabis would have likely been a boon for companies like Cann Group and Althea Holdings. Not only would it have resulted in a potentially massive market just across the Tasman for cannabis products, but it would have also likely increased the pressure for Australian states to follow suit over the next few years. That prospect now looks a lot dimmer in light of this result.
And it’s not as though ASX cannabis investors could have used some good news either. Cann Group shares are today more than 90% below where they were back in early 2018. As are THC Global shares (more than 75% down from early 2018) and Althea (down over 60% since July 2019).
It looks as though ASX cannabis investors will have to wait a little longer to turn their current headaches into new highs.