What happened
Several U.S.-based cannabis stocks enjoyed nice gains on Monday. Shares of GrowGeneration (GRWG -4.47%) were jumping 13.5% as of 3:14 p.m. EST. Stocks of multistate cannabis operators also were rising, with Curaleaf Holdings (CURLF 2.02%) and Green Thumb Industries (GTBIF 2.46%) up 6.4% and 5.4%, respectively. CBD pioneer Charlotte's Web Holdings (CWBHF -5.65%) moved higher as well, with shares rising 3% after climbing as much as 7.5% earlier in the day.
GrowGeneration was the only pot stock to have big news. The hydroponics and organic gardening retailer announced preliminary full-year 2020 revenue of $192 million, up 140% year over year. It also boosted 2021 revenue guidance to between $335 million and $350 million from the previous outlook of revenue between $280 million and $300 million.
Curaleaf announced that it had completed a $50 million revolving credit facility. That's not the kinds of news that usually sparks a major move for a stock, though.
Image source: Getty Images.
So what
In a sense, all four of these stocks rose today for the same underlying reason: improving prospects for the U.S. cannabis industry. GrowGeneration enjoyed the biggest move because the sneak peek at its Q4 results and bullish 2021 guidance provided the most tangible evidence of those prospects.
Although the U.S. isn't likely to fully legalize marijuana in the near term, the possibility for decriminalization of cannabis at the federal level is greater than ever with Democrats soon to be in control of the White House, Senate, and House of Representatives. This would likely expand the growth opportunities for GrowGeneration, Curaleaf, and Green Thumb, in particular. Although hemp-based CBD is already legal at the federal level, the changing in political winds in Washington, D.C., could also help Charlotte's Web if the Food and Drug Administration takes a more favorable position on CBD dietary supplements.
The November votes in Arizona and New Jersey to legalize recreational marijuana also will open up new markets for GrowGeneration, Curaleaf, and Green Thumb. New Jersey's move will almost certainly put pressure on New York state to speed up its efforts to legalize recreational pot as well.
Now what
It won't be surprising for all four of these cannabis stocks to deliver solid returns in 2021. The markedly better landscape for the U.S. cannabis industry will likely continue to attract investors' dollars.
If legislation to decriminalize marijuana at the federal level passes, it could set the stage for companies that currently list their shares over the counter to move to major U.S. stock exchanges. That would make these stocks, including Curaleaf and Green Thumb, more attractive to investors than they already are.
