Please ensure Javascript is enabled for purposes of website accessibility

Why Sundial Growers Stock Surged Today

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

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

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. 

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

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

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

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/25/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.