It's Friday, and marijuana stocks are on fire. In late-morning trading, circa 11:20 a.m. EST, shares of industry giant Canopy Growth (CGC -0.66%) are up 10.9%, while smaller Tilray (TLRY) and Aurora Cannabis (ACB -3.55%) are surging 33.8% and 63.2%, respectively.
You can thank New York Gov. Andrew Cuomo for that.
As you've probably heard, on Tuesday the state of New Jersey voted 66.9% to 33.1% to legalize the recreational use of marijuana. Yesterday, the governor of neighboring New York announced that it, too, could go the legalization route -- perhaps in 2021.
New York already permits the medical use of marijuana and has decriminalized possession of small amounts of the drug. But in an interview with local WAMC radio, Cuomo suggested that the conditions are now "ripe" to take the next logical step and legalize marijuana entirely.
Why? Well, with New Jersey's conversion, three of the states surrounding New York have now legalized marijuana, making it easy for any New Yorker who wants to buy it to cross a border and do so. Problem is, when they do so, the sales tax they pay on that purchase will go to someone other than New York, and with New York state strapped for cash, Cuomo thinks he'd rather keep those tax dollars at home.
Already this week, voters in Arizona, South Dakota, and Montana -- in addition to New Jersey -- have voted to legalize pot. That makes 15 states in which the drug is totally legal, at least under state law. Clearly, the legalization wave is gathering steam, and the addition of the nation's fourth-most-populous state to the ranks of "legal weed" states would only add to that momentum.
Investors buying Canopy Growth, Aurora Cannabis, and Tilray stocks today are just reading the writing on the wall, and it's plain as day they're right.