Trump's Thumbs-Up Is Adding Fuel to This Rally
America is approaching a peace treaty in the war on drugs...
Last week, President Donald Trump endorsed the use of medical cannabis with a video post on Truth Social.
According to the video, cannabidiol ("CBD") – one of the active ingredients in hemp – could be a game-changer for senior health... and can help control pain, improve sleep, reduce stress, and even slow down disease progression.
"Older adults are suffering needlessly," the video states. "Hemp-derived CBD can help them feel better, live longer, and improve their quality of life significantly."
The video even goes so far as calling for developing Food and Drug Administration ("FDA") standards for cannabis... and rolling it into Medicare coverage.
The president's Truth Social post shows the White House is paying lip service to medical cannabis... and investors would be wise to pay attention to this development.
Let me explain...
Cannabis Stocks Are Staging a Rebound
Trump's post advocated for a specific ingredient in the cannabis plant – hemp-derived CBD.
Today, CBD is prescribed as an anticonvulsant. But it's being researched for treatment of anxiety, addiction, psychosis, movement disorders, and pain. According to Trump's post, 20% of seniors already ingest CBD in some form.
But there's a problem. CBD has only been federally legal since the 2018 Farm Bill was signed into law. The Farm Bill handed CBD oversight to the FDA. But so far, the FDA has failed to build a solid regulatory framework for the compound.
Because of this lack of oversight, CBD products are prone to mislabeling and unverified claims.
My colleague Dr. David Eifrig wrote about this problem in his Health & Wealth Bulletin newsletter last year...
Researchers from Cambridge Health Alliance and the University of Mississippi analyzed the amount of melatonin, cannabidiol (or "CBD," an active ingredient in cannabis), and serotonin (one of the "happiness hormones") in 25 brands of melatonin gummies that they purchased online... and found that 22 of the 25 supposed melatonin supplements were mislabeled.
With a severe lack of regulation, it's risky for investors to get excited about the companies that produce CBD.
But America may be on the verge of a big revision of FDA cannabis policy. That could be just the spark this sector needs.
And it's driving massive investment in the cannabis market today...
We can see it using the AdvisorShares Pure U.S. Cannabis Fund (MSOS). This exchange-traded fund contains a basket of companies related to the cannabis and hemp industry.
After a multiyear bear market, MSOS has staged a rally in recent months. Take a look...
MSOS fell for more than four years. But since June, the fund has soared 156% as federal headwinds have receded.
In short, the setup in cannabis markets is tilted to the upside today.
After years of crashing, any good news for this sector is driving massive investment. And with Trump delivering such a ringing endorsement of CBD, we have a long-term structural catalyst for further gains.
The cannabis bear market might finally be over. After such a long plunge, there's plenty of room for this industry to soar as sentiment turns.
Don't miss your chance to ride this wave. Consider adding MSOS to your portfolio today.
Good investing,
Sean Michael Cummings
Further Reading
It has been a tough couple of years for health care... with slowing biotech investment and higher interest rates since the pandemic. But America's massive demographic shift is creating an opportunity for the sector. And we're already seeing signs of recovery.
One pizza chain learned the hard way that a perception problem sometimes requires an unconventional solution. But its risky strategy to earn the public's trust paid off... resulting in one of the biggest turnarounds in corporate history.
HIGHS AND LOWS
NEW HIGHS OF NOTE LAST WEEK
Interactive Brokers (IBKR)... online brokerage
Robinhood Markets (HOOD)... stock-trading app
Johnson & Johnson (JNJ)... health titan
AstraZeneca (AZN)... pharmaceuticals
Intel (INTC)... chipmaker
Garmin (GRMN)... GPS technology
Ciena (CIEN)... telecom equipment
CVS Health (CVS)... drugstores and vaccines
Five Below (FIVE)... discount retail
Levi Strauss (LEVI)... jeans
Monster Beverage (MNST)... energy drinks
Loews (L)... hotels
Caterpillar (CAT)... heavy machinery
Cummins (CMI)... diesel engines
Constellation Energy (CEG)... utilities
Coeur Mining (CDE)... precious metals
Elbit Systems (ESLT)... "offense" contractor
Kratos Defense & Security Solutions (KTOS)... "offense" contractor
General Dynamics (GD)... defense contractor
NEW LOWS OF NOTE LAST WEEK
Morningstar (MORN)... financial services
FactSet Research Systems (FDS)... financial data
Sprouts Farmers Market (SFM)... grocery stores
Colgate-Palmolive (CL)... personal-care products