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Why Canopy Growth, Aurora Cannabis, and Hexo Stocks Are on Fire Today

By Rich Smith - Jun 2, 2021 at 4:41PM

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Marijuana legalization just won a powerful ally.

What happened

Marijuana stocks were on fire Wednesday, with shares of Hexo (HEXO -5.98%) closing the day up 4.4%, Canopy Growth (CGC 0.26%) rising 5.4%, and Aurora Cannabis (ACB -7.27%) beating them both with a 7.8% gain. And just one word explains why all these stocks are doing so well:

Amazon (AMZN -2.86%).

Marijuana and CBD oil overflowing a shopping cart

Why would Amazon want to make marijuana legal? Image source: Getty Images.

So what

Yesterday, in a surprise announcement, Amazon declared its support for proposed marijuana legalization in the United States.

Buried deep within a post on the company's "AboutAmazon" blog, that primarily discussed workplace efficiency initiatives, Amazon Worldwide Consumer CEO Dave Clark said the company's "public policy team will be actively supporting The Marijuana Opportunity Reinvestment and Expungement Act of 2021 (MORE Act)," with the goal of legalizing marijuana at the federal level, and expunging records of criminal marijuana offenses as well.  

Furthermore, Reuters reports that Amazon has advised it will "no longer screen its job applicants for marijuana use for any positions not regulated by the Department of Transportation."  

Now what

These two developments -- leniency on Amazon's part in regard to employee marijuana use, and a push to officially legalize marijuana at the national level -- would probably have sufficed in and of themselves to give marijuana stocks a boost today. But on top of all the above, Clark further expressed the hope that "other employers will join us" in this effort, "and that policymakers will act swiftly to pass this law."  

It seems Amazon is trying to start a movement in the corporate world. But why?

Well, here's one theory: In an aside that investors in marijuana stocks and in Amazon stock alike might want to take note of, Reuters observed that Amazon "does not allow marijuana sales on its platform."

Yet.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Rich Smith has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Amazon. The Motley Fool recommends HEXO Corp. and recommends the following options: long January 2022 $1,920 calls on Amazon and short January 2022 $1,940 calls on Amazon. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Amazon.com, Inc. Stock Quote
Amazon.com, Inc.
AMZN
$138.23 (-2.86%) $-4.07
Aurora Cannabis Stock Quote
Aurora Cannabis
ACB
$1.53 (-7.27%) $0.12
Canopy Growth Stock Quote
Canopy Growth
CGC
$3.82 (0.26%) $0.01
HEXO Stock Quote
HEXO
HEXO
$0.22 (-5.98%) $0.01

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

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