Legal Weed Stocks Dip Despite New Jersey Governor Signing Recreational Cannabis Bill Into Law

Cannabis stocks failed to rally on the heels of New Jersey becoming the 13th state to legalize marijuana for adult use.

The major weed ETFs were all down as of 4 p.m. after the Monday news announcement: 

• The ETFMG Alternative Harvest ETF MJ: -3.57%
• The AdvisorShares Pure Cannabis ETF YOLO: -3.39%
• The Cannabis ETF THCX: -4.54%
• The Amplify Seymour Cannabis ETF CNBS: -3.59%.
• The SPDR S&P 500 ETF Trust SPY: -0.75%.

New Jersey Gov. Phil Murphy signed a trio of adult-use cannabis reform bills into law Monday, making recreational marijuana legal and regulated for adults 21 years and older. It's also decriminalized.

Starting immediately, those who had been subject to an arrest for petty marijuana possession — an arrest that may have kept them from from obtaining employment or continuing education — will be able to "get relief and move forward,” Murphy said. 

What Took So Long? The New Jersey ballot question on Election Day, Nov. 3, garnered more than 2.7 million votes in its favor. After the election, the state legislature went back-and-forth on what to do if anyone under 21 is caught with marijuana. And it's still murky. 

According to the state Policemen’s Benevolent Association (PBA), there's essentially no penalty with the exception of a warning or write-up.

"We do not oppose the legalization of marijuana as an organization," the PBA stated. "[But] this statute adds so much guess work and uncertainty that we would advise our members throughout the state to take no law enforcement action regarding marijuana or alcohol use by any party in the state."

Recently, Murphy signed a bill that modifies penalties for magic mushroom possession, reducing the conviction for those caught with less than 1 ounce of psilocybin mushrooms from a third-degree crime with a punishment of up to five years in prison to a "disorderly person offense" punishable by six months in county jail.

The fine was also lessened from up to $35,000 to $1,000.

What's Next? Cantor Fitzgerald analyst Pablo Zuanic says to keep an eye on Curaleaf Holdings Inc. (OTCQX: CURLF), Green Thumb Industries Inc. GTBIF and Columbia Care Inc. CCHWF.

Those three companies are among the cannabis stocks with the largest presence in the Garden State. All three stocks were down by the time the market closed Monday evening. 

Up to 24 more cannabis licenses will be issused in New Jersey.