The cannabis sector as a whole is getting a big boost today from news that Germany has approved partial cannabis legalization legislation. This law, expected to go into effect on April 1, has Tilray (NASDAQ:TLRY) and a number of other cannabis producers surging. Shares of TLRY stock are up more than 16% at the time of writing. This is in part due to the company’s existing footprint in this key European market.
This new law will permit individuals to possess up to 25 grams of cannabis for personal consumption only. Up to 50 grams of cannabis may be stored at home as well. The April 1 commencement date for this new law came sooner than some expected, considering the uneven views on cannabis legalization in Germany’s legislature. Yet the ruling has received enough votes, and Germany will soon become the latest country to at least partially legalize cannabis usage.
Let’s dive into why this is such a big deal for Tilray and why investors are making a big deal of this announcement.
TLRY Stock Surges on Partial German Cannabis Legalization
Germany’s legalization of cannabis makes this country the latest to follow in the footsteps of other nations that have put in place laws to permit medical and/or recreational marijuana usage. The fact that this law follows a global shift toward cannabis acceptance is certainly a good thing for Tilray. The company with distribution agreements in Europe and a company that’s focused on its export business for longer than many of its peers.
Based in Canada (the first major global market to fully legalize cannabis), Tilray investors have long awaited rulings in key markets, particularly the United States. However, without any sort of such announcement in recent years, TLRY stock has been hammered. Investors betting on a wave of legalization have not seen such a wave materialize, at least within the time frame many expected.
That said, the German legal cannabis market is expected to be around a $3 billion total market opportunity for companies like Tilary to explore, with a $45 billion medical market already in play. Tilray’s positioning as the operator of “one of only three in-country cultivation facilities located in Germany today” positions the company well to capitalize on this expanded total addressable market.
We’ll have to see if this rally can continue, but it’s certainly some long-awaited positive news for investors. Growth stocks are rallying as expectations for interest rate cuts pick up. Accordingly, I wouldn’t be surprised to see a flurry of speculative capital flow into this space in the coming weeks.
On the date of publication, Chris MacDonald 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.
