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Why Sundial, Cronos Group, Curaleaf, and Other Cannabis Stocks Soared Today

By Joe Tenebruso - Jan 4, 2021 at 5:45PM

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The marijuana industry could receive a boost in the coming days.

What happened

Marijuana stocks popped on Monday, as investors looked ahead to crucial Senate runoff elections. By the close of trading, shares of Sundial Growers ( SNDL 1.84% ), Cronos Group ( CRON 3.85% ), and Curaleaf Holdings ( CURLF -7.15% ) were up 16.1%, 9.7%, and 7.3%, respectively.

So what 

Investors appear to be growing more optimistic that the Democrats will be able to win two Senate seats in Georgia's runoff elections on Tuesday. Should they do so, it could make the decriminalization of marijuana more likely and perhaps pave the way for legalization at the federal level.

A person is holding a cannabis leaf in front of an American flag.

Upcoming Senate elections could provide a lift to the U.S. cannabis market. Image source: Getty Images.

While both races are likely to be close, recent polls, such as those reported by political polling site FiveThirtyEight, suggest that Democratic candidates Jon Ossoff and the Rev. Raphael Warnock appear to have gained slight leads over Republican Senators David Perdue and Kelly Loeffler in recent days. 

Now what

President-elect Joe Biden and Vice President-elect Kamala Harris have promised to decriminalize marijuana, which would make it easier for cannabis companies to gain access to traditional financial services. Many banks have declined to serve marijuana-related businesses out of fear of breaking federal laws. Decriminalization might lead more banks to provide loans and other services to marijuana producers.

Sundial Growers, Cronos Group, and Curaleaf Holdings would all benefit from such developments, which would lower their cost of capital. And by reducing their financing costs, they could accelerate their growth plans.

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.

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Stocks Mentioned

Sundial Growers Inc. Stock Quote
Sundial Growers Inc.
$0.57 (1.84%) $0.01
Cronos Group Stock Quote
Cronos Group
$4.32 (3.85%) $0.16
Curaleaf Holdings, Inc. Stock Quote
Curaleaf Holdings, Inc.
$8.57 (-7.15%) $0.66

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

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