The cannabis industry is in a state of volatility, thanks in large part to the U.S. government’s waffling on legalization. With the market mostly based in Canada, shifts toward and away from cannabis policy have a direct effect on investor sentiment. However, today, even with talk heating back up around federal legalization, cannabis stocks are winning big. It appears many of the stocks are moving up in sympathy with their largest peer.
The U.S. government seems to be in a state of limbo over cannabis legalization. As one of his campaign promises, President Joe Biden favored the decriminalization of cannabis, but thus far, he has left it up to states to legalize it on an individual basis. So, while cannabis stock interest ramped up around the time of his inauguration, things cooled down quickly when it became apparent that cannabis legalization wouldn’t be an early policy shift during his first term.
And recently, legalization isn’t necessarily helping out cannabis plays, either.
As Senate Majority Leader Chuck Schumer and his caucus unveil the newest and one of the largest cannabis bills yet, cannabis stocks have been pushed down. It makes sense; these companies are all Canadian plays. While federal legalization of cannabis would open up them up to a huge new base of consumers, it would also spawn countless competitors.
Cannabis Stocks Grow Despite Competitive Threats
The stock that’s catalyzing these big gains today is Tilray (NASDAQ:TLRY). InvestorPlace contributor Robert Lakin reported on Tilray’s earnings today. The Canadian cannabis giant is sharing its numbers for the first time since its merger with Aphria. The merger made Tilray the largest producer of cannabis in the world.
As Lakin points out, the numbers Tilray came to investors with weren’t necessarily stunning. The company did post a net income of $33.6 million in its last fiscal quarter, a nice change of pace from the $84.3 million loss suffered in the same quarter last year. It’s just that revenue missed analyst’s hopes — the consensus called for revenue of $146.2 million, but the company only posted $142.2 million.
Still though, the revenue represented a growth of over 25% from the previous quarter, showing some real power in the Aphria merger. As a result of this news, the stock is seeing a boost of over 22%. Other cannabis stocks are moving in sympathy. Canopy Growth (NASDAQ:CGC) is up nearly 7%, as is Aurora Cannabis (NASDAQ:ACB). Sundial Growers (NASDAQ:SNDL), the ever-popular meme play, is up nearly 9%.
On the date of publication, Brenden Rearick did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
