November got off to a positive start for the stock market, as major market benchmarks were able to post some gains on Monday following last week's big sell-off. Even with the uncertainties related to Tuesday's election and the worsening COVID-19 pandemic, investors were willing to focus on best-case scenarios and push stocks higher. The Dow Jones Industrial Average (DJINDICES:^DJI) had the biggest gains, but the S&P 500 (SNPINDEX:^GSPC) and Nasdaq Composite (NASDAQINDEX:^IXIC) also finished with respectable moves higher.

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Data source: Yahoo! Finance.

The area of the market that showed the most impressive strength was the cannabis industry, as marijuana stocks moved higher. Even without a clear catalyst to press higher, companies across the industry seem to be banking on a change in federal policy after Election Day.

Broad-based gains

Cannabis stocks across the sector performed well. Among the tried-and-true market favorites, Canadian cultivator Aurora Cannabis (NASDAQ:ACB) posted a 17% gain, matched by Tilray (NASDAQ:TLRY). Cronos Group (NASDAQ:CRON) followed with a 14% rise of its own, with Canopy Growth (NASDAQ:CGC) managing an 11% gain. Aphria (NASDAQ:APHA) picked up 12%.

Greenhouse with rows of cannabis plants under fans hanging from ceiling.

Image source: Getty Images.

The companies that help facilitate marijuana production also saw some gains, albeit not as big. Cannabis-focused real estate investment trust Innovative Industrial Properties (NYSE:IIPR) was higher by 5% on the day. Scotts Miracle-Gro (NYSE:SMG) rose 3.5%.

Without company-specific news explaining any of the moves, it appears that investors are hoping for an election result that will bring about change in the way companies in the sector do business in the U.S. market. That might prove to be ambitious.

Challenges to cannabis companies

The problem with U.S. cannabis regulation is that it's a prime example of federal inconsistency. The U.S. government has thus far allowed states to legalize marijuana use, but pot is still listed as an illegal substance under federal law.

That introduces many obstacles for cannabis companies just to do business. Things that most companies take for granted, including cash management, banking services, insurance coverage, and interstate commerce, aren't necessarily available.

A change in federal government policy toward cannabis could finally resolve inconsistencies. Obviously, cannabis companies hope that the U.S. will decriminalize marijuana at the federal level, opening the door to more mainstream business operations.

Far from a sure thing

Yet those who think that the election will result in fundamental change to U.S. cannabis regulation might well prove to be sorely disappointed. With so many other policy priorities right now, including handling of the COVID-19 pandemic, it's hard to imagine that changing marijuana laws will be particularly high up on the list.

On the other hand, some innovative players in the cannabis sector are proving that you don't actually need federal legalization to thrive. For instance, Trulieve (OTC:TCNNF) has concentrated its efforts on the state of Florida, where medical marijuana is legal. By containing all of its operations within the Sunshine State and owning its own grow operations, dispensaries, and distribution assets, Trulieve has been able to make money even as most cannabis companies are struggling with huge losses.

Marijuana stocks  have seen a lot of turbulence in recent years, and past hopes have been quashed repeatedly. Today's gains might not signal a lasting reversal for the companies that have grabbed most of the attention in the cannabis sector, but that doesn't mean that there won't be big winners in marijuana in the years to come.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.