The cannabis sector has long been waiting for a potential federal legalization in the U.S. Despite hiccups in the legislative process and other, more pressing concerns, pot stocks shot up just before the weekend after a House panel said it would prepare to vote next week to decriminalize marijuana for the second time.
The House Rules Committee said that it’s prepared a meeting for Monday afternoon where it would prepare a legalization bill across the entire country. Although nothing is official just yet, even this initial news was enough to send pot stocks soaring.
So far, around 18 states and Washington, D.C. have legalized marijuana for adult use, while 38 states have legalized cannabis for medicinal purposes. This long-awaited legalization in America would represent a massive milestone for the industry, which has otherwise been forced to operate on a state-by-state basis within the country, often dealing with banking and regulatory hurdles in the process.
Since last week, many pot stocks have seen significant declines, largely due to a lack of progress on the legalization issue. Even Canadian companies have seen their market values collapse as a result of these delays.
The main issue for cannabis hopefuls is whether the bill will pass in the Senate. Most industry experts don’t think it will pass but see this as more of a symbol than anything else.
“We expect the MORE Act to clear the House once again, but we view it primarily as a messaging bill as it has no viable path to passage through the Senate,” said BTIG strategist Isaac Boltansky. Others are more hopeful, like analyst Pablo Zuanic, who said that it “could be an honorable start, and provide a realistic spark for future broader more comprehensive reform.”
Most cannabis companies are up following the news. Cronos Group (NYSE: CRON), Hexo (NYSE: HEXO), and Sundial Growers (NYSE: SNDL) were up between 6-8%, and all three hit a three-month high before Friday finished. Aurora Cannabis (NYSE: ACB) and Canopy Growth (NYSE: CGC) were both up around 10% as well.
Tilray (NYSE: TLRY) was the biggest winner by far, however. Shares of the company soared over 22.8%. Most investors see Tilray as the company with the most to gain from a U.S. legalization. The company already commands a significant size of the Canadian market, as well as 20% of the German medical marijuana market. A legalization scenario would allow Tilray to sell and transport cannabis across the border and sell in America.
Most analysts remain cautious about Tilray’s future prospects. Just five experts have a “buy” rating, while more than 14 are currently neutral on the stock and two have “sell” ratings.
Tilray Company Profile
Tilray, headquartered in Nanaimo, Canada, cultivates and sells medical and recreational cannabis through a portfolio of brands that include Canaca, Dubon, and Manitoba Harvest. The bulk of Tilray’s sales are in Canada, but the company also sells CBD Products in the U.S. and exports medical cannabis globally from its production facilities in Canada and Portugal. Tilray also has a partnership with AB InBev to develop cannabis-infused drinks. – Warrior Trading News
