It’s been a good day for Clever Leaves (NASDAQ:CLVR) for multiple reasons, including an upcoming marijuana legalization vote and a strong earnings report. Indeed, cannabis stocks are soaring today as the industry awaits a vote from Capitol Hill on a bill for the nationwide legalization of marijuana. Plus, the Florida-based company recently reported strong Q4 2021 earnings, sending CLVR stock soaring yesterday. Today, it is still in the green.
What’s Happening With CLVR Stock
After rising 13% yesterday after market close, CLVR stock isn’t slowing down. As of this writing, it is up more than 26% for the day.
To understand why, let’s first dive into yesterday’s earnings report. Yesterday’s call brought not just impressive overall earnings figures but also the reaffirmation of Clever Leaves’ 2022 outlook. The quarter saw revenue hit $4.2 million, a gain of roughly 25%. Revenue from cannabinoids rose 11% to $1.1M, while for the non-cannabinoid category it spiked by 31% and reached $3.1 million.
Reports indicate that 2021 saw growth of non-cannabinoid revenue driven by increased distributor demand and combined with the relaxing of certain restrictive Covid-19 policies. The rising cannabinoid sales figures were due to expanding sales activity. Despite a net loss of $24 million, the overall earnings report is good news for investors.
In addition, the stock is clearly riding the momentum spurred by the impending marijuana legalization vote. Both large- and small-cap cannabis stocks are in the green as enthusiasm among investors mounts.
Why It Matters
The entire sector is anxiously awaiting Monday’s verdict on the legalization bill, called the MORE Act. The momentum that we’ve seen from cannabis stocks today indicates that companies aren’t expecting bad news.
There is certainly cause for optimism. Yesterday, the Cannabidiol and Marihuana Research Expansion Act received a unanimous Senate vote. This bill is only geared toward expanding cannabis research, but it’s very positive that it received no opposition.
The Marijuana Opportunity, Reinvestment and Expungement, or MORE Act, was initially brought forward by Jerry Nadler (D-NY). This isn’t the first time it has come to a vote. In late 2020, the bill received a House vote of 228 to 164. The Republican-controlled Senate blocked it from advancing further. Now that the other party holds the majority number of Senate seats, cannabis companies have reason to believe there may be a different outcome.
What It Means
The passing of the MORE Act would mean the removal of marijuana from the controlled substances list. This type of change would eliminate many of the restrictions faced by companies that produce or distribute cannabis in the U.S.
Data indicates that sales of legal and recreational cannabis in the U.S. have been growing steadily and are not expected to stop in coming years. If the bill is passed, it will propel CLVR stock out of the penny category. The company’s recent earnings indicate that it is a good play for cannabis stocks. Investors would be wise to double down before the passing of the MORE act sends it shooting up.
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On the date of publication, Samuel O’Brient 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.