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Why Sundial Growers Stock Surged Today

By Joe Tenebruso - Updated Feb 3, 2021 at 4:40PM

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The prospect of federal legalization in the U.S. could spark a torrent of acquisitions in the cannabis industry.

What happened

Shares of Sundial Growers (SNDL 5.41%) jumped 16% on Wednesday as a bevy of positive developments heightened investor interest in marijuana stocks.

So what 

Cannabis stocks received a boost earlier this week after Democratic Senate Majority Leader Chuck Schumer and Senators Cory Booker and Ron Wyden pledged to lead an effort to end the federal prohibition on marijuana. 

"The War on Drugs has been a war on people -- particularly people of color," the senators said in a joint statement. "Ending the federal marijuana prohibition is necessary to right the wrongs of this failed war and end decades of harm inflicted on communities of color across the country."

Public support for marijuana legalization stands at an all-time high. A Gallup poll in November showed that more than two-thirds of Americans want marijuana to be legalized at the federal level. 

A person is holding a cannabis leaf in front of a U.S. flag.

Sixty-eight percent of Americans want marijuana to be legal in the U.S. Image source: Getty Images.

On Wednesday, cannabis investors received more good news when Jazz Pharmaceuticals said it would acquire GW Pharmaceuticals -- developer of Epidiolex, the first plant-based cannabis drug approved by the U.S. Food and Drug Administration (FDA) -- for $7 billion. Analysts say the merger could signal the start of a new wave of deal-making in the cannabis industry. 

Now what

Sundial Growers has been preparing itself to participate in the consolidation of the marijuana sector. After a series of share offerings, Sundial expects to have roughly $615 million in unrestricted cash that it could use to purchase other cannabis companies should attractive acquisition opportunities materialize. 

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Sundial Growers Inc. Stock Quote
Sundial Growers Inc.
SNDL
$0.39 (5.41%) $0.02

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