Could ASX cannabis shares be set for a resurgence?

The world's legal and medical fraternities are taking small steps forward in the medicinal cannabis movement.

A Cronos Australia farmer and ASX cannabis shares investor stands in a field of cannabis plants and smiles at the camera

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

ASX cannabis shares are a highly volatile sector of the market, with large variations in stock price movements between them.

This is a young industry that is largely dependent on the world's legal and medical fraternities to accept and approve medicinal cannabis as a treatment for many conditions and adjust laws accordingly.

The process for change in this regard is incredibly slow, which makes ASX cannabis shares very volatile.

Let's look at what's been happening lately.

News from the United States

Our Fool colleagues in the US report rising new excitement over cannabis stocks, but it's based purely on speculation.

There are two bits of news that have US cannabis shares investors excited.

Firstly, the US Department of Health has recommended a downgrade to the scheduling of marijuana from a Schedule 1 substance — the same category as heroin — to Schedule III.

The recommendation was issued late in August and follows an 11-month review.

The US Drug Enforcement Administration (DEA) defines Schedule III drugs as having a "moderate to low potential for physical and psychological dependence".

Nothing has happened as a result of the recommendation yet.

Meantime, a bipartisan group of US senators are pushing for state-legalised cannabis businesses to receive access to finance.

The group introduced the Secure and Fair Enforcement Regulation (SAFER) Banking Act in the Senate today, according to Bloomberg Law.

The bill has been around for a few years but has been held up at various points.

Its introduction in the Senate is good news, but nothing consequential for US or ASX cannabis shares has happened yet.

How are ASX cannabis shares performing of late?

US cannabis shares such as Aurora Cannabis In(NASDAQ: ACB) and Canopy Growth Corp (NASDAQ: CGC) have rocketed since news of the health department's recommendation broke on 30 August.

But not much has happened for ASX cannabis shares.

Over the same time period:

  • Botanix Pharmaceuticals Ltd (ASX: BOT) shares have remained steady at 19 cents
  • Cann Group Ltd (ASX: CAN) shares have fallen 7.7% to 12 cents
  • Incannex Healthcare Ltd (ASX: IHL) shares have fallen 18.8% to 6.5 cents
  • Ecofibre Ltd (ASX: EOF) shares have risen 17.7% to 20 cents
  • Althea Group Holdings Ltd (ASX: AGH) shares have fallen 15% to 3.4 cents
  • Little Green Pharma Ltd (ASX: LGP) shares have fallen 8.8% to 16 cents

As we covered, Botanix was in the news yesterday after the ASX issued a price query.

The Botanix share price hit a 52-week high of 21 cents, up an impressive 160% since the start of June.

Aussie news affecting ASX cannabis shares

Australia legalised medicinal marijuana in 2016.

Recreational use remains illegal except in the ACT.

In June, the Legalise Cannabis party introduced a bill in the Western Australia, Victoria, and New South Wales parliaments to legalise marijuana for personal use as well as medical reasons.

The bill is called the Regulation of Personal Adult Use of Cannabis Bill.

The Australian Therapeutic Goods Administration (TGA) down-classified two psychedelics to enable their use in treating mental illness in July.

The psychedelics are MDMA for post-traumatic stress disorder (PTSD) and psilocybin for treatment-resistant major depressive disorder.

Only a psychiatrist can prescribe them.

Reset Mind Sciences CEO Shaun Duffy said the TGA's decision was "truly groundbreaking".

Little Green Pharma said the TGA move meant Australia "will become the first market in the world to recognise psychedelics as medicines … ".

In August, we learned the Victorian Government will conduct an 18-month Australia-first trial to test medicinal cannabis users' driving abilities.

Current roadside drug testing laws allow police to test for the mere presence of tetrahydrocannabinol (THC).

Medicinal cannabis users argue that they are only ingesting tiny amounts of THC in their health therapies.

Therefore, the law should be updated to test for impairment rather than just presence.

Foolish takeaway

All of these small changes represent the slow-moving wheel of the cannabis industry's evolution.

For this reason, ASX cannabis shares remain highly speculative investments.

While some US cannabis stocks have surged on recent news, the same can't be said for ASX shares.

Motley Fool contributor Bronwyn Allen has positions in Althea Group. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Cannabis Shares

A man in a horse head mask and suit jumps for joy on a beach.
Cannabis Shares

Could ASX cannabis shares be set for a smoking hot rebound?

ASX cannabis stocks could be set for a strong finish to 2024.

Read more »

Man in a cannabis greenhouse looks unhappy and puts his thumb down.
Cannabis Shares

Why are these 2 ASX cannabis stocks sputtering today?

Up 174% in 2023, this ASX cannabis share is giving back some more of its gains today.

Read more »

A young male investor wearing a white business shirt screams in frustration with his hands grasping his hair after ASX 200 shares fell rapidly today and appear to be heading into a stock market crash
Cannabis Shares

Guess which ASX cannabis share is crashing 36% following an FDA blow

Rookie mistake: This cannabis share just missed out on FDA approval for a simple reason.

Read more »

A young woman holding her phone smiles broadly and looks excited, after receiving good news.
Cannabis Shares

This ASX cannabis stock is up 160% since June, and it has an FDA ruling coming up!

Investors are very excited about this cannabis stock.

Read more »

two men in formal business clothing closely inspect a bud from a cannabis crop.
Cannabis Shares

Why ASX cannabis shares just jumped back into the spotlight

ASX cannabis shares operate in a nation where medical marijuana is legal but recreational use remains broadly forbidden.

Read more »

A hip young man with a beard and manbun sits thoughtfully at his laptop computer in a darkened room, staring at the screen with his chin resting on his hand in thought.
Cannabis Shares

Should I buy Incannex shares while they're at multi-year lows, or steer clear?

Is the cannabis-based pharma company a bargain buy right now?

Read more »

Man in the green house growing medical cannabis
Cannabis Shares

A $3k investment in ASX cannabis stock Incannex 5 years ago is now worth $15,000. Here's why

This medicinal cannabis company has been a rare winner in its field.

Read more »

a man wearing old fashioned aviator cap and goggles emerges from the top of a cannon pointed towards the sky. He is holding a phone and taking a selfie.
Cannabis Shares

Which ASX cannabis share is surging 27% on record quarterly results?

Althea CEO Josh Fegan has declared "a landmark turning point" for the company.

Read more »