What happened
Canadian marijuana stocks Aurora Cannabis (ACB 1.90%), HEXO (HEXO +0.00%), and Tilray (TLRY +0.00%) all slipped on Tuesday. They recovered, but not to an admirable degree: Aurora and HEXO both closed the day lower (by 1.7% and 2.4%, respectively), while Tilray eked out a 2% gain.
So what
There was no obvious catalyst for this bearishness. Rather, it feels like a pullback from the recent general optimism surrounding marijuana stocks.
Image source: Getty Images.
The Biden administration is expected to either decriminalize or full-out legalize the drug, which would allow foreign producers and distributors access to the massive U.S. market.
But that expectation is largely baked into the prices of weed stocks, which have largely been on the rise ever since Biden was declared the winner. It's the same for the coming merger of two Canadian weedies, Aphria (APHA +0.00%) and Tilray, that excited investors when it was announced last month.
Now what
Investors might also be worried, justifiably, that the decriminalization/legalization push won't happen for some time, given other pressing matters troubling the administration (like the coronavirus pandemic).
On top of that, determined U.S. companies will pounce once the law changes, and they might be seen as better positioned to compete here. I don't feel that anyone should trade out of Aurora, HEXO, Aphria, or Tilray purely on that basis, however. There is much public support for marijuana law reform, and whenever it hits, it'll be the tide that lifts all boats, no matter where they're sailing in from.
