The North American Marijuana Index has gained 105% over the past three months, buoyed by expectations that California and several other states could vote to legalize recreational weed this November.
The North American Marijuana Index closed at $125.53 on Friday, down 5.6%. The index finished higher for the week and has tripled since the beginning of the year.
Top gainers on Friday included General Cannabis Corp (CANN), Grow Condos Inc. (GRWC) and MassRoots Inc. (MSRT).
The Marijuana Index, which began trading in January 2015, includes just 23 stocks out of nearly 200 in the industry. To be included in the cannabis index, companies must have a market capitalization of at least $10 million, daily trading volume of $20,000 and a stock price above 10 cents. The average stock on the index has a market cap of $263.9 million, according to CNBC.
California, which is home to more than 12% of the US population, is expected to get lit up this fall. A recent poll conducted on behalf of the L.A. Times found that 58% of California voters will vote “Yes” on Proposition 64, a statue that would legalize the recreational use of marijuana.
But California isn’t the only state voting on marijuana legalization next month. Nevada, Maine, Arizona and Massachusetts will also be casting ballots on whether to permit recreational weed usage. Other states, including Florida and Arkansas, will be voting on reforming medical marijuana laws.
Nationwide, support for weed legalization has been growing thanks in part to successes in Colorado and Washington, the first states to legalize recreational weed in 2014. A Pew study recently found that 57% of Americans said they support legalizing marijuana, up from just 32% a decade ago.
A vote to legalize in California and Florida in particular could have a major impact on the market, which could lead to a huge spike in cannabis stocks and other pharmaceuticals tied to the industry. As a nascent industry, returns for cannabis stocks have been highly volatile. In 2015, the Marijuana Index plunged nearly 60%. According to experts, cannabis stocks are highly correlated with each other, which means they tend to rise and fall in lockstep with the broader industry.