Shares of Charlotte's Web Holdings (CWBHF -5.24%) were jumping 11.6% as of 11:26 a.m. EST on Friday. The hemp products company didn't announce any news. Instead, its gain appears to be related to investors moving into cannabis stocks in general. Many other cannabis stocks also rose today.
Sometimes stocks trend higher on improving sentiment among investors for a specific industry. And there are several reasons many have become more bullish about investing in cannabis stocks.
One key factor behind this optimism is the real possibility that cannabis could be decriminalized at the federal level. If this happens, it would open the door for cannabis companies to list their shares on major U.S. stock exchanges. The legislation would also likely lead to an even greater expansion in the U.S. cannabis market.
Of course, hemp has already been legalized in the U.S. In one sense, the prospects of cannabis reform don't affect Charlotte's Web. However, good news for the cannabis industry would likely lift all cannabis stocks.
Also, support for cannabis decriminalization could bode well for the chances of the U.S. Congress passing legislation to allow the use of hemp-derived products as dietary supplements. The U.S. Food and Drug Administration (FDA) still hasn't established a regulatory framework for the use of hemp CBD in food.
The key thing to watch now with Charlotte's Web is the announcement of its fourth-quarter results on March 25. Charlotte's Web's management indicated in the company's Q3 call that it expected continued consumer momentum in the fourth quarter.