SNDL Stock: Why Cannabis Play Sundial Is Surging Monday

Things are looking green on Monday, at least for high-flying Sundial Growers (NASDAQ:SNDL). There are a few broad catalysts supporting the cannabis space, but today is also bringing a unique catalyst for SNDL stock and its peers. So what do you need to know now?

A close-up shot of a marijuana growhouse.
Source: Shutterstock

To start, what is Sundial Growers? Well, the company is rather small. It has a market capitalization of just under $320 million, and that is after a 90% rally in intraday trading. But more importantly, SNDL stock represents a company that produces, distributes and sells cannabis products in Canada.

This company identity explains the first reason why SNDL stock is so hot right now. Public sentiment on cannabis use in the United States continues to warm, and the upcoming inauguration of President-elect Joe Biden is also helping matters. This is because the Democrat plans to decriminalize marijuana, perhaps paving a path for broader legalization at the federal level. Plus, along with his Election Day victory, a handful of U.S. states turned green thanks to voters.

Today brought another, more specific catalyst for Sundial Growers. Importantly, House Majority Leader Steny Hoyer announced that the U.S. House of Representatives will vote on landmark cannabis legislation this week. Specifically, the Marijuana Opportunity Reinvestment and Expungement Act is on the table. If passed, the MORE Act would end the federal ban on cannabis.

Clearly, investors are excited. Other cannabis names like Aurora Cannabis (NYSE:ACB) and Hexo (NYSE:HEXO) are also soaring. But there is one big question investors should be asking about SNDL stock…

Why the MORE Act Matters for SNDL Stock

Remember, Sundial Growers focuses its business in Canada. So then, how would it benefit from the passage of the MORE Act? And even more broadly, why does Biden have any sway on SNDL stock?

Well, as rumor has it, Sundial Growers has been struggling in recent weeks. Although SNDL shares have been trending higher on political speculation, the company has said it needs some financing. As a result of this struggle, the company has said it is considering strategic alternatives, potentially including a sale. Unsurprisingly, that is where the real excitement around SNDL stock comes in.

Investors are already putting two and two together, guessing which of the more prominent companies could snap up Sundial Growers. Will it be Aurora Cannabis? Or maybe Cronos (NASDAQ:CRON)? Without any more information, this is nothing but speculation. However, it is powerful speculation that is bidding up SNDL stock. Because of the upcoming Biden inauguration and pro-cannabis legislation, tables could soon be turning for the entire cannabis industry. That would boost Canadian businesses, and pave a path toward expansion in the U.S. and abroad. Additionally, it would make now a great time to be snapping up smaller businesses at a discount.

With the MORE Act on the table later this week, it is clear why investors are excited. Now we just have to wait and see if an acquisition pans out.

On the date of publication, Sarah Smith did not have (either directly or indirectly) any positions in the securities mentioned in this article. 

Sarah Smith is a Web Content Producer for InvestorPlace.com. 


Article printed from InvestorPlace Media, https://investorplace.com/2020/11/sndl-stock-why-cannabis-play-sundial-is-surging-monday/.

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