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Why Marijuana Stocks Glowed Green Today

By Rich Smith - Feb 2, 2021 at 3:10PM

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A trio of Democratic senators propose legalizing pot.

What happened

Three United States senators announced yesterday evening that they will push to end the outlawing of cannabis and begin the process of legalizing marijuana at the federal level this year.

Shares of major marijuana stocks including Canopy Growth (CGC 10.24%), Aurora Cannabis (ACB 17.36%), Cronos (CRON 5.83%), and Clever Leaves Holdings (NASDAQ: CLVR) leapt on the news Tuesday, up 5.5%, 10.1%, 10.9%, and 18.6% (!), respectively, as of early afternoon.

Close-up of a marijuana plants

Image source: Getty Images.

So what

It's finally happening (maybe): marijuana legalization at the federal level. As CNBC reports, Sens. Ron Wyden of Oregon and Cory Booker of New Jersey -- two states where marijuana is, or soon will be, legal for recreational use -- joined Senate Majority Leader Chuck Schumer last night to declare that "the War on Drugs has been a war on people -- particularly people of color," framing the case for marijuana legalization as a case for social justice.  

Together, the three senators promised to "push to pass this year sweeping legislation that would end the federal prohibition on marijuana," reports CNBC, which adds that a recent Gallup poll shows 68% of Americans now favor full legalization.

The senators are furthermore promising to introduce "a unified discussion draft on comprehensive reform" of marijuana laws early this year.

Now what

Marijuana is already legal in one form or another in a large majority of U.S. states. The main problem at this point is that it remains technically il-legal at the federal level, a fact that has banks unwilling to lend or extend other basic banking services to marijuana companies, and has Canadian cannabis companies such as Aurora Cannabis, Canopy Growth, and Cronos afraid of entering the market.

Legalization promises to allay those fears, even as it makes the marijuana business both easier to enter and more profitable for those who do enter into it, across the U.S. While the timeline for legalization remains uncertain, the ball's at the top of the hill, and the senators are starting to get it rolling. Where it goes from here seems inevitable.

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Stocks Mentioned

Canopy Growth Stock Quote
Canopy Growth
CGC
$5.92 (10.24%) $0.55
Aurora Cannabis Stock Quote
Aurora Cannabis
ACB
$2.84 (17.36%) $0.42
Cronos Group Stock Quote
Cronos Group
CRON
$3.27 (5.83%) $0.18

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

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