Canadian Cannabis Companies Pop As U.S. Senate Welcomes Democrats From Georgia
Investing.com | Jan 12, 2021 22:42
The North American cannabis sector has become a field of green since last week’s Democratic wins in the US Senate runoff elections. With the Senate set to fall under Democratic control later this month, the general consensus is that the federal legalization of marijuana will be a reality in the coming years.
The Democrats have clearly stated their intention to legalize pot on the federal level. It’s a move that will eliminate many legal, regulatory and financing hurdles. And the markets reacted swiftly.
Among the largest gainers on the news were Canadian-based vertically integrated growers that have been biding their time to enter what is considered the most lucrative marijuana market on the globe.
Canadian cannabis stocks that are also traded on the US markets began their upward push when trading opened on Jan. 6, the day after the election, when only one race had been called for the Democrats, and the other looked likely to follow, although the vote count stretched into the next day.
Shares of Aphria (NASDAQ:APHA) (TSX:APHA), Cronos Group (NASDAQ:CRON) (TSX:CRON) and others jumped, recording double-digit gains.
The move was expected as pot stocks have been edging upward since last November’s election of President-elect Joseph Biden. But at that time, with the Senate still in Republican control, the path to legalization—well, at least the timeline—was not clear. Now, however, investors appear reassured.
Last week, Cronos shares made impressive gains. As of yesterday’s close, shares were up almost 31% compared to the previous Monday’s open.
But the biggest gainer was Tilray (NASDAQ:TLRY). By yesterday’s close at $12.33, it had gained about 36.4% since the start of the previous week. Still riding on the news that it inked a $5-billion merger with Aphria last month, a deal that will make it the largest marijuana company in the world when the merger closes later this year.
It is poised to make inroads into the US, including in the adult beverage market. The prospect is that shares will continue to gain, but they still have a way to go to make up for the losses they suffered in 2020. Despite the most recent gains, Tilray shares are still down more than 20% in the past 12 months.
Investors might also want to watch the Toronto-based Cronos Group. Traded in both Canada and on the NASDAQ, shares last week climbed at a head-turning clip, gaining almost 31% between the start of trading last week and yesterday’s close.
And not to be counted out by any stretch is Ontario-based Canopy Growth (NASDAQ:CGC) (TSX:WEED). With its strategic partnership with US-based Acreage Holdings (OTC:ACRGF), it is set up to make the fastest inroads in the US market.
It’s major stakeholder, US beer-maker Constellation Brands (NYSE:STZ), is also eager to see its investment pay off in the large US adult beverage sector. So look for quick acceleration of operations there.
New York Wants To Tap Into Pot Tax Revenue/h2
And this just in: Another sign of greener pastures for the cannabis sector came yesterday, when New York Governor Andrew Cuomo announced his pledge to legalize adult-use marijuana and the creation of the Office of Cannabis Management.
The decision would allow the Empire State to cash in on the lucrative tax revenue generated by legal pot, a revenue source that neighbouring states, like New Jersey, have seen climb in recent years. Cuomo said Monday that he expected marijuana tax revenue to hit $300 million a year.
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