Please ensure Javascript is enabled for purposes of website accessibility

Why Canopy Growth, Hexo, Tilray, and Other Pot Stocks Soared Today

By Keith Speights - Mar 15, 2021 at 3:50PM

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

New York could be very close to legalizing recreational marijuana.

What happened

Several pot stocks soared on Monday as the state of New York moved closer to legalizing recreational marijuana. Tilray (TLRY) was the biggest mover, with shares jumping 12% as of 3:24 p.m. EDT. Aurora Cannabis (ACB 4.40%) shares were up 5.1%. Canopy Growth (CGC 0.49%) and Hexo (HEXO 3.36%) weren't too far behind, with the stocks rising 4.1% and 4.5%, respectively.

The momentum wasn't limited only to Canadian marijuana stocks. Shares of U.S.-based CBD pioneer Charlotte's Web Holdings (CWBHF 2.29%) moved 2.1% higher after jumping as much as 5.5% earlier in the day.

Street sign with a cannabis leaf next to the words: "New York."

Image source: Getty Images.

So what

New York Gov. Andrew Cuomo stated in a press conference that he and Assembly Majority Leader Crystal Peoples-Stokes talked throughout the weekend about legalizing recreational marijuana. He noted that they are "very close" to reaching an agreement. 

However, Canadian cannabis producers such as Aurora, Canopy Growth, Hexo, and Tilray won't be able to sell products in New York even if the state legalizes adult-use marijuana in the near future. These companies can't retain their listings on major U.S. stock exchanges or market cannabis products in the U.S. as long as marijuana remains illegal at the federal level.

Charlotte's Web wouldn't be a direct beneficiary from the legalization of recreational pot in New York, either. The company's CBD products are derived from hemp, which is already legal throughout the U.S.

So why did these cannabis stocks rise? Investors are no doubt hoping that U.S. cannabis reform will pass that would clear the way for Canadian cannabis producers to enter the U.S. market. Canopy Growth would arguably be in the best position in the group to expand into the U.S. because of its option to acquire Acreage Holdings and its option to acquire a significant stake in TerrAscend.

As for Charlotte's Web, probably the most likely reason for its move higher is that a rising tide lifts all boats. The increasing prospect that New York will legalize recreational marijuana is causing nearly every cannabis stock to move higher because it would greatly expand the addressable U.S. market.

Now what

Reporter Zack Fink with NY1 News tweeted on Monday that his sources expect that a final version of legislation to legalize recreational pot will be ready "in the next day or so." He predicted that this would then set the stage for a vote in both chambers of the New York state legislature next week. 

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

Aurora Cannabis Stock Quote
Aurora Cannabis
$2.96 (4.40%) $0.12
Canopy Growth Stock Quote
Canopy Growth
$5.95 (0.49%) $0.03
HEXO Stock Quote
$0.27 (3.36%) $0.01
Tilray Stock Quote
Charlotte's Web Holdings, Inc. Stock Quote
Charlotte's Web Holdings, Inc.
$0.51 (2.29%) $0.01
Acreage Holdings, Inc. Stock Quote
Acreage Holdings, Inc.
TerrAscend Corp. Stock Quote
TerrAscend Corp.
$3.81 (-2.56%) $0.10

*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 service.

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 05/16/2022.

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.