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Cannabis stocks slide after Senator McConnell rebukes marijuana legislation

Yahoo Finance Live examines how Senator Mitch McConnell's rebuking of marijuana legislation may have impacted cannabis-tied stocks.

Video Transcript

DAVE BRIGGS: And my play, pot stocks, many of which surged to start the week on some legislative optimism, in particular, regarding Safe Banking. But Senate Minority Leader Mitch McConnell today dashed those high hopes, criticizing Democrats for attempting to include, quote, "pet priorities in a large scale defense bill," or what's called the NDAA.

McConnell saying if Democrats wanted these controversial items so badly, they had two years to move them across the floor. He's right in that account. Let's take a look at shares of Tilray, Aurora, Curaleaf, Cresco Labs. And they are down 14%, 12%, 13% for Curaleaf, 8% for Cresco Labs. It is an awful, awful day for pot stocks.

And I keep saying this and getting argued with on Twitter by people that say, hey, Safe Banking is going to get through. I continue to say there is no optimism for this industry, at least in the short-term. Now, Democrats should have brought that bill to the bill by itself and see if Republicans would support it. But they wanted to include so many things in that. That is going to be a mistake that they may regret for years to come.

SEANA SMITH: Yeah, which is part of McConnell's argument that they should have prioritized this. The stock, so they trade almost like on any sort of news. And we talked about the massive reactions that we've seen in the stock to the upside and to the downside, almost trading similar to meme stocks. And I know many companies within this space would disagree with that, saying that they trade more so on the fundamentals, but I think you can make a little bit of an argument there.

But I think the volatility of these names just show the fact that there's so much uncertainty when it comes to federal legislation, what that will potentially look like. Not so much in the near future, but what that would look like years, potentially, down the road. And without additional approval, obviously, it could be a tough time for so many of these names.

DAVE BRIGGS: Right, and now that the House controlled by Republicans, forget that optimism, at least in the short-term.

SEANA SMITH: Yeah, exactly. Good point there.