Cannabis producers surged on Wednesday as firms and investors turned more optimistic toward marijuana legalization in the US.
Pot stocks have thrived in 2021 as Democrats’ control of the government boosts the odds of legalization. President Joe Biden indicated during his campaign he would move to decriminalize the drug. Democrats in Congress have echoed such calls and taken additional steps, pushing for the full legalization of cannabis in the US.
The renewed effort to reschedule marijuana has been a major boon for pot producers. While several states have either decriminalized or fully legalized the drug, a change of the federal drug law would open up the rest of the US and rapidly expand the marijuana market.
Aphria and Tilray led the charge, gaining as much as 58% and 36%, respectively. Aurora Cannabis and Cronos climbed 20% and 15%, respectively. Canopy Growth traded as much as 15% higher.
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The Wednesday rallies extend gains made earlier in the week. Tilray soared on Tuesday after announcing a deal to import and distribute medical cannabis products in the UK. Canopy Growth leaped in the previous session after reporting better-than-expected quarterly figures and moving closer to turning a profit.
Several industry CEOs have incorporated US marijuana legalization into their near-term forecasts. Canopy CEO David Klein said in a Tuesday earnings call he expects Biden to decriminalize the drug and allow the firm to enter the US market in 2021.
Tilray CEO Brendan Kennedy told Bloomberg TV that federal legalization could be achieved in the next 12 to 18 months.
The high-flying stocks have also seen new demand from casual investors. Members of the r/wallstreetbets forum looking for new stocks to bid higher have increasingly touted Aphria, Tilray, and other cannabis producers as strong picks.
Federal marijuana legislation still faces an uphill battle. Democrats in Congress are currently focused on passing the president’s $1.9 trillion stimulus bill and arguing the case to impeach President Donald Trump for his role in the January 6 Capitol riots. With the coronavirus pandemic continuing to rage across the country and spread massive economic pain, the Biden administration isn’t likely to immediately prioritize cannabis legalization.
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