It is now confirmed that one of the largest banks in Canada (BMO) is no longer accepting short position from retail investors on cannabis stocks.
The rumors had taken off when many people on Twitter report the situation. The reasons given by BMO are the risk of volatility in cannabis stocks.
What are the real reasons?
- We all know that BMO is heavily involved in cannabis company funding. For several months, the number of shorts on cannabis is very high which has resulted in the fall of the majority of cannabis stock that are all near their lowest. BMO does not care that their company does not recover from this falls which would be a heavy loss for them
- Then, since the market has been short for a long time and the companies are at their lowest, we believe that the arrival of the legalization of the market of the edible as well as the increase of the income gives a huge upside potential which would put retail investors at a high risk of not being able to buy back shares and again caused a big loss at BMO.
Will other banks embark on this move and prevent stocks to be shorted ? For now nobody wants to answer but it is obvious that the others will follow.
It is clear that the market is expecting a sharp rise in the coming weeks. The massive short covering has the power to bring cannabis stocks to a level even higher than that of the beginning of the year 2019
This article is written and published by The Cannabis Stock
Disclaimer : The Cannabis Stock wants to promote the cannabis market with the best publication on the market. The Cannabis Stock does not recommend selling or buying any of the company mentioned and is not responsible for any losses that may result.