Please ensure Javascript is enabled for purposes of website accessibility
Free Article Join Over 1 Million Premium Members And Get More In-Depth Stock Guidance and Research

3 Marijuana Stocks That Could Skyrocket in Just 2 Days

By Keith Speights - Jan 4, 2021 at 6:05AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The countdown is on.

Unlike most of their Canadian counterparts, many U.S.-based cannabis operators generated impressive stock gains in 2020. Cannabis markets in multiple key states thrived despite the COVID-19 pandemic. It also certainly helped that marijuana was a big winner in the November U.S. elections, with five states voting to legalize cannabis in some form.

To borrow a line from classic rock band Bachman-Turner Overdrive, though, you ain't seen nothing yet. At least, it's possible that's the case. I think that marijuana stocks could skyrocket in just two days from now -- with three stocks especially poised to take off.

White arrow with line trending up and cannabis plants and cash in the background

Image source: Getty Images.

Georgia on my mind

What's so special about two days from now -- Jan. 6, 2021? It's the day after the Senate run-off elections are held in the state of Georgia.

Democratic candidate Jon Osoff is up against incumbent Republican Sen. David Perdue in one of those races. Rev. Raphael Warnock faces Republican Kelly Loeffler, who was appointed to fill the spot of retiring GOP Sen. Johnny Isakson last year, in the other race.

The run-offs in Georgia are critically important because the control of the U.S. Senate hangs in the balance. If Democrats capture both seats, the Senate will be divided 50-50 between the two major political parties (including two independent senators who caucus with the Democrats). That means that Vice-president-elect Kamala Harris will cast any tie-breaking votes, giving Democrats control of the Senate.

Now for why all of this matters for marijuana stocks. As long as Sen. Mitch McConnell (R-Ky.) remains Senate Majority Leader, any cannabis reform legislation has a snowball's chance in hell of even making it to the Senate floor for a vote. But if a bill that made access to financial services for cannabis companies easier or that changed federal laws to recognize the rights of states to enforce their own cannabis laws ever did come to a vote in the Senate, there's a decent chance that it could pass.

The U.S. House of Representatives has already voted in favor of such legislation in the past. It will likely do so again in the new Congress. And if those two Georgia Senate seats swing to the Democrats, it would probably clear the way for the cannabis reform bills to go before the Senate as well.

Three pot stocks poised to soar

It's highly likely that most pot stocks will jump if Democrats retake control of the Senate. I'd include the well-known Canadian stocks in the group. However, my view is that three U.S. cannabis stocks are in especially strong positions to soar.

Cresco Labs ( CRLBF -6.06% )Green Thumb Industries ( GTBIF -6.11% ), and Curaleaf Holdings ( CURLF -7.15% ) rank among the biggest multistate cannabis operators in the U.S. Their stocks absolutely crushed it in 2020 as all three companies posted strong revenue growth. All three companies should be profitable in 2021 -- something the big Canadian players can only dream about.

There's one main reason why Cresco, Green Thumb, and Curaleaf should see their stock prices go through the roof three days from now if Democrats win both Georgia Senate seats. Currently, the companies can't list their shares on major U.S. stock exchanges because it's not allowed while cannabis remains illegal at the federal level. This means that American investors can buy these stocks only on over-the-counter (OTC) exchanges. Some trading platforms, notably including Robinhood, don't allow trading of these OTC pot stocks. 

But a Democratic majority in the Senate (albeit a slim one) could set the stage for federal marijuana laws to be changed. The U.S. doesn't have to legalize pot across the country to enable Cresco, Green Thumb, and Curaleaf to list their shares on the New York Stock Exchange or the Nasdaq ( NDAQ -1.07% ). All that's needed is to acknowledge at the federal level that states can set their own marijuana laws.

Just how much could these stocks skyrocket later this week with a vote that changes the control of the Senate? I wouldn't be surprised if Cresco, Green Thumb, and Curaleaf jumped by 30% (and perhaps a lot higher than that).

A lesson from 2020

The polls in both Georgia Senate races are extremely close. At the time of this writing, Democrats Ossoff and Warnock hold small leads over their GOP opponents based on RealClearPolitics' average of polls. 

If there's one lesson to be learned from 2020, though, it's that anything can happen. The Republican candidates could end up winning comfortably. Investors, therefore, shouldn't bet the farm on huge jumps for Cresco, Green Thumb, and Curaleaf.

The good news, however, is that the prospects for all three companies look good even if federal marijuana laws aren't changed. Buying the stocks could offer something that doesn't manifest itself all that often -- a win-win proposition.

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.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Green Thumb Industries Stock Quote
Green Thumb Industries
GTBIF
$19.38 (-6.11%) $-1.26
Nasdaq, Inc. Stock Quote
Nasdaq, Inc.
NDAQ
$197.98 (-1.07%) $-2.14
Curaleaf Holdings, Inc. Stock Quote
Curaleaf Holdings, Inc.
CURLF
$8.57 (-7.15%) $0.66
Cresco Labs Inc. Stock Quote
Cresco Labs Inc.
CRLBF
$7.60 (-6.06%) $0.49

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
624%
 
S&P 500 Returns
140%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 12/07/2021.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Our Most Popular Articles

Premium Investing Services

Invest better with the Motley Fool. Get stock recommendations, portfolio guidance, and more from the Motley Fool's premium services.