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Why Aurora Cannabis, Tilray, Hexo, and Sundial Investors Are Panicking Today

By Rich Smith – Jul 22, 2021 at 2:47PM

Key Points

  • Multiple media outlets released stories highlighting the dangers of marijuana today.
  • Two competing marijuana legalization bills are working their way through Congress.
  • Soon, President Biden may be called upon to decide whether or not to legalize marijuana.

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Are marijuana investors paranoid about "cannabis-induced psychosis"?

What happened

Call it a "Reefer Madness" moment. In a flashback to the classic 1936 anti-drug film, marijuana investors got spooked today by news reports of health concerns among cannabis consumers -- and it's playing havoc with marijuana stocks.  

In 1:55 p.m. EDT trading:

  • Aurora Cannabis (ACB -0.75%) fell 3.5%;
  • Hexo (HEXO -1.35%) has lost 3.8%;
  • Sundial Growers (SNDL 3.83%) stock is down 4.4%;
  • and Tilray (TLRY 1.85%) got thrown for a 4.7% loss.
Dried marijuana flower lying on tabletop.

Image source: Getty Images.

So what

Separate articles published on major news sites over the past couple of days included:

  • Recounting stories of children eating cannabis gummies and suffering overdoses (CBS);
  • Citing a study linking a rising incidence of schizophrenia to "problematic use of marijuana" (CNN);
  • and quoting an anti-marijuana activist calling it a "highly processed product" that's a source of "cannabis-induced psychosis" (Fox News).    

Now what

These negative media mentions come at the same time when two competing marijuana legalization bills are making their way through the U.S. Senate and House, respectively -- and they come at the same time when President Biden is considering whether he will (or will not) sign any legalization bill that ultimately receives passing votes from Congress.

The more strident the criticism gets, the more likely the president will ultimately decide he will not sign a bill legalizing marijuana. And seeing as that seems to be the direction he was leaning before these headlines, I'd say that the chances for cannabis becoming legal at the federal level just got a whole lot worse.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool recommends HEXO Corp. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Aurora Cannabis Inc. Stock Quote
Aurora Cannabis Inc.
ACB
$1.32 (-0.75%) $0.01
HEXO Corp. Stock Quote
HEXO Corp.
HEXO
$0.17 (-1.35%) $0.00
SNDL Inc.  Stock Quote
SNDL Inc.
SNDL
$2.71 (3.83%) $0.10
Tilray, Inc. Stock Quote
Tilray, Inc.
TLRY
$3.85 (1.85%) $0.07

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

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