Marijuana stocks skyrocketed on Friday as vote counting in several states pointed increasingly toward a victory for Democratic candidate Joe Biden. By close of trading, shares of Cronos Group (NASDAQ:CRON), OrganiGram Holdings (NASDAQ:OGI), and HEXO Corp (NASDAQ:HEXO) were up 16%, 18%, and 24%, respectively.
Biden and his running mate Kamala Harris have promised to decriminalize marijuana at the federal level. A notable step toward full-scale legalization, decriminalizing marijuana would likely also make it easier for cannabis companies to operate in the U.S. Many banks have shied away from providing financial services to marijuana-related businesses for fear of running afoul of federal law. Decriminalization might make banks more willing to serve cannabis companies.
It's even possible that Biden will take steps toward federally legalizing cannabis, which would certainly be a boon for Cronos Group, HEXO, and OrganiGram. Legal cannabis sales could approach $100 billion in the U.S. within the next decade, according to some analysts.
Legalization is also taking place at the state level -- a trend that appears to be accelerating as governments seek to mitigate pandemic-related tax revenue shortfalls. Five states recently approved measures to legalize either medical or recreational marijuana sales, and more are likely to do so in the coming years.
Cronos Group, HEXO, and OrganiGram all stand to benefit from these developments, and investors bid up their shares in kind.