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 Inc (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.
