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Why Tilray, Aphria, and OrganiGram Stocks Are All Soaring Today

By Howard Smith - Feb 9, 2021 at 12:41PM

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Investors in the Canadian pot growers are seeing potential outside the Great White North.

What happened

The stocks of Canadian pot growers have been on a tear since the start of 2021. Much of the excitement has come from news outside the companies' home border, and that's no exception today. 

Shares of Tilray (TLRY), Aphria (APHA), and OrganiGram Holdings (OGI 3.91%) are showing particular strength today. As of 11:30 a.m. EST, shares have moved as follows:

  • Tilray up 46%;
  • Aphria up 25.7%; and
  • OrganiGram Holdings up 31.4%.

So what

Those three stocks have all soared in 2021 between 225% to more than 360%. Much of the excitement has been on the continued trend toward marijuana legalization in the U.S. Most recently, the Virginia state assembly passed legislation to legalize marijuana for adult recreational use. The process still has more to go before it could be signed into law, but it's another sign of the pendulum swinging in the U.S., where federal legalization would have significant ramifications for Canadian growers.  

Today's moves also stem from business updates from across the pond in Europe and the U.K.

Hand holding marijuana leaf paper cutout with busy city street in the background

Image source: Getty Images.

Now what

Today, Tilray announced a new distribution agreement with U.K. medical cannabis distributor Grow Pharma. Under the agreement, Tilray's pharmaceutical-grade medical cannabis products will be imported and distributed by Grow Pharma in the U.K. "Regulations are progressing as more and more countries across Europe are recognizing the benefits of medical cannabis," Tilray Europe's managing director, Sascha Mielcarek, said in a statement. 

Also this month, Tilray has announced it has exported its first medical cannabis shipment to Spain, and it has received the first and only market authorization for medical cannabis products in Portugal.

This growth is good news for Aphria as well. In December, Aphria and Tilray announced a plan to merge. The combined company would be one of the largest global cannabis companies. Aphria CEO Irwin Simon will lead the combined company after the merger, which is expected to close by the end of the second quarter. 

The trend toward the legal use of cannabis is also impacting the smaller OrganiGram. With its market capitalization of just over $1 billion, investors see much potential for increasing returns. Last month the company reported that its fiscal first-quarter 2021 net revenue from Canadian adult recreational use grew 30% compared with the prior-year period, though its overall net revenue decreased. 

An expansion of the legal cannabis market will benefit all participants. For now, Canadian growers remain somewhat of a speculative investment, if one is waiting for U.S. federal legalization. But the companies are also expanding in other markets, and shareholders are seeing hefty positive returns today. 

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