Sundial Growers (NASDAQ:SNDL) and its investors must be feeling peachy keen today. Just take a look at SNDL stock! With shares up nearly 15% as Georgia continues to count votes in two Senate runoff races, it seems that the future is quite bright for the cannabis play.
So what is the story here? Well, Sundial Growers has been gathering quite a fanbase on Wall Street. The cannabis company, through a variety of brands, participates in the recreational market. This means like its larger peers Canopy Growth (NASDAQ:CGC) and Aurora Cannabis (NYSE:ACB), legal reform in the United States would be a huge catalyst.
And right now, many investors think that catalyst is on the way. Why? Well, with the upcoming inauguration of President-elect Joe Biden and a Democratic lead in the House of Representatives, investors were already bullish on cannabis. This is because Biden has promised to decriminalize marijuana at the federal level. Plus, the House passed the Marijuana Opportunity Reinvestment and Expungement (MORE) Act. As it stands right now, the MORE Act has very little chance in the Republican-controlled Senate. However, that could be changing thanks to what is happening in Georgia.
Yesterday, Georgians cast their votes in two runoff races for the U.S. Senate. At stake is control of the chamber. Although officials are still counting votes, outlets have called one race in favor of Rev. Raphael Warnock, the Democrat who has now bested Republican Sen. Kelly Loeffler. And as Democrat Jon Ossoff widens his lead against Republican Sen. David Perdue, many investors are feeling hopeful.
With hopes of an Ossoff victory in mind, SNDL stock is up more than 10%. So what else do investors need to know?
SNDL Stock and the Georgia Bull Case
Just as we have seen with Canopy Growth and Aurora Cannabis, investors see the bull case quite simply. Biden takes office and Democrats take control of the Senate and House of Representatives. From there, federal-level reform seems more possible than ever. Importantly, bulls in this space have long been waiting for U.S. legalization. In fact, as the cannabis market has struggled in recent months, many have pointed to legal delays in the U.S. market as a source of misery.
For investors, that means a victory by Ossoff would certainly help the cannabis bull case. But what about for SNDL stock? Does a win for cannabis guarantee a win for SNDL shares?
That case is a little harder to make, but Sundial Growers looks like it is moving in the right direction. What do I mean? Well, at the end of December, the company announced that it is finally debt free. For many investors, that was a big sign. After all, Sundial has seriously struggled with its finances. At one point, the company had a valuation north of $1 billion. But like many cannabis companies, Sundial started to run out of cash.
Now though, the company has paid off its debt and says it is ready for future growth. Although analysts are not all on board the SNDL stock train, a Democrat-controlled Senate could give shares a big boost. Keep this stock on your radar, and wait for more confirmation of the so-called blue wave.
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 with InvestorPlace.com.