How High Can Marijuana Stocks Get on Biden Presidency?

There will likely be plenty of opportunities to capitalize on volatility in both directions in the weeks and months to come...

Commodities 1

Three months ago, we identified marijuana stocks as potential winners under a Biden presidency, noting that, “[r]elative to some of the more liberal Democratic candidates, Biden is seemingly lukewarm toward recreational marijuana, but the prospects of full legalization are nonetheless better under Biden than Trump, especially if the House of Representatives and/or Senate is also under Democratic control. In that case, stocks like Canopy Growth (CGC), GW Pharmaceuticals (GWPH), Curaleaf (CURL), Cronos Group (CRON), and Aurora Cannabis (ACB) could catch a bid…”

While not necessarily unique or profound, this perspective has aged well. At one point on Monday, the “Alternative Harvest” ETF (ticker MJ) had surged 33% in less than a week from its pre-election price, and the industry bellwether is still trading up by about 13% from its November 3rd close:

Source: TradingView, GAIN Capital

From a technical perspective, MJ has seen its 21-day EMA cross above its 50-day EMA, signaling a possible shift to a medium-term uptrend (though we did see a similar bullish crossover sputter out back in Q2). The RSI likewise reached “overbought” territory above 70 for the first time since June at the start of the week, a bullish sign from a medium-term perspective.

Drilling down into the top holdings, Canopy Growth (CGC), Tilray (TLRY), Cronos Group (CRON), and Aurora Cannabis (ACB) all saw similar bullish spikes late last week before pulling back so far this week. Moving forward, bullish-inclined traders may want to consider buy entries near the confluence of moving averages if prices continue to pull back, with Aurora Cannabis (ACB) showing notably higher volatility than the other top holdings and therefore offering potentially higher risk and reward for traders comfortable bearing that risk.

Source: TradingView, GAIN Capital

At the risk of being a buzzkill (pun intended), there’s a risk that these marijuana stocks have gotten ahead of themselves. Though the prospects of federal legalization in the United States are certainly rosier under a Biden Presidency than they would have been under Trump, it’s notable that Democrats will likely not have a majority in the US Senate (pending the results of two runoff Senate elections in traditionally red Georgia), so it may be difficult for Democrats to enact their full agenda. And, even if federal legalization is passed in the coming years, there remains a risk of a “buy the rumor, sell the news” reaction in marijuana stocks.

Unlike the lethargy that its ultimate product produces in users, this nascent industry is surrounded by giddy excitement on the part of investors, so there will likely be plenty of opportunities to capitalize on volatility in both directions in the weeks and months to come, regardless of how the federal legal battle shakes out.

More from Equities


This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

GAIN Capital Singapore Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the GAIN Capital group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), GAIN Capital Singapore Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact GAIN Capital Singapore Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither GAIN Capital Singapore Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

GAIN Capital Singapore Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit for the complete Risk Disclosure Statement.