Shares of marijuana stocks are rising on Wednesday after recent comments from several prominent politicians regarding reform legislation. As of 12:15 p.m. EST, shares of these Canadian growers were all higher:
- Tilray (TLRY), up 16%;
- Aphria (APHA), up 14%;
- OrganiGram Holdings (OGI -3.72%), up 16%; and
- Aurora Cannabis (ACB -4.44%), up 8%.
Investors are bidding up shares after several Democratic senators released a joint statement on Monday signaling plans to pursue new legislation to reform regulations in the United States. Canadian growers need federal legalization in the U.S. to be able to develop business across the border.
Sens. Cory Booker of New Jersey and Ron Wyden of Oregon joined Senate Majority Leader Chuck Schumer of New York in releasing a statement this week on cannabis reform legislation. The statement said they will target "comprehensive cannabis reform legislation" in the current congressional session.
Momentum for marijuana legislation has been growing at the state level. Currently, 15 states and the District of Columbia have legalized recreational marijuana for adult use, and 36 states have legalized medical marijuana.
But Canadian growers need federal legislation to integrate their businesses in the U.S. Recent initiatives by Aphria and Tilray have prepared the companies for the possibility. Aphria acquired U.S. craft brewer SweetWater Brewing late last year, and then announced it will merge with Tilray, creating the largest global cannabis company by revenue. A move into the U.S. could provide the newly combined company with a large new runway for growth.
Aurora Cannabis has been struggling more than many of its peers. Management has been trying to improve the company's business fundamentals since it launched a transformation plan early in 2020. The goals are to reduce expenses, better scrutinize capital expenditures, and improve the balance sheet with the goal of attaining profitability. Access to the U.S. market would be a welcome addition to the turnaround.
OrganiGram is currently on a better path than Aurora, as it reported net revenue up 25% in the most recently reported quarter versus the prior-year quarter. OrganiGram also has a more flexible operation to help control costs. It operates a single cultivation facility, in Moncton, New Brunswick.
The trio of senators said that the marijuana laws are unfair to certain populations in the U.S., particularly those of color. In the statement they said, "Ending the federal marijuana prohibition is necessary to right the wrongs of this failed war [on drugs] and end decades of harm inflicted on communities of color across the country."
Marijuana investors would welcome a change in legislation, as today's stock moves are showing.