Cannabis stocks are up across the board today on growing optimism that recreational use will soon be legal in the U.S.
Leading cannabis producers Sundial Growers (NASDAQ:SNDL), Canopy Growth (NASDAQ:CGC) and Tilray (NASDAQ:TLRY) are each up between 5% and 15% this morning on reports that the U.S. House of Representatives plans to vote once again on the Marijuana Opportunity, Reinvestment and Expungement (MORE) Act. This legislation aims to make cannabis legal at the federal level in the U.S.
Prior to today, cannabis stocks were in retreat. The ETFMG Alternative Harvest (NYSEARCA:MJ), a cannabis-focused exchange-traded fund, is down more than 50% in the last year.
What Happened With Cannabis Stocks
Media reports say that lawmakers plan to vote on the MORE Act within the House of Representatives next week. Lawmakers there passed an earlier version of this bill in December 2020, but the MORE Act stalled out after it then went on to the Senate.
Several other Canadian cannabis stocks are also trending higher today on the news. This list includes Aurora Cannabis (NASDAQ:ACB), Hexo (NASDAQ:HEXO), OrganiGram (NASDAQ:OGI), High Tide (NASDAQ:HITI) and Clever Leaves (NASDAQ:CLVR).
Why It Matters
As we reported earlier, many investors see federal legalization in the U.S. as the key upside catalyst for cannabis stocks. While such legalization in Canada initially lifted producers there, things have stalled out. Reports now discuss black-market sales, government regulations and issues of scaling and bringing costs down. Because the U.S. represents a larger market, there is hope that Canadian producers can shine there. Furthering that case are estimates that the legal cannabis market in America will hit $25 billion by 2025.
What’s Next for ACB, CGC, TLRY, SNDL
Cannabis stocks are getting a boost today on optimism that Congress could finally pass the MORE Act.
However, there is no guarantee that this will happen. While the news of the upcoming House discussion is a good sign for cannabis stock bulls, investors should proceed with caution to see what happens next.
On the date of publication, Joel Baglole 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.