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Why Aurora Cannabis, Canopy Growth, and Charlotte's Web Stocks Are Hopping Today

By Rich Smith – Aug 5, 2021 at 3:49PM

Key Points

  • The U.S. House of Representatives and the U.S. Senate are both considering versions of a new law to legalize marijuana.
  • In the Senate this week, amendments are moving forward that would benefit both marijuana and CBD.
  • Charlotte's Web Holdings could be the biggest beneficiary of these moves in Congress.

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A flurry of marijuana-related amendments in the Senate boost the prospects for marijuana -- and CBD as well.

What happened

Congress is hard at work trying to pass a new law to legalize marijuana (in case you hadn't heard), and as the work progresses, investors in marijuana stocks are starting to get excited.

In particular, news reports on progress in Congress helped boost the shares of marijuana stocks. As of 3:10 p.m. EDT, Canopy Growth (CGC -10.25%) is up 6%, Aurora Cannabis (ACB -6.61%) is up 6.8%, and Charlotte's Web Holdings (CWBHF -9.86%) is up 2.6%.

Curiously, though, the best news today may be on Charlotte's Web -- the stock that's gaining the least.

Smiling farmers in a field of marijuana plants

Image source: Getty Images.

So what

Don't get me wrong -- there's good news for Canopy Growth and Aurora Cannabis, too. As MarijuanaMoment reports, the Senate Appropriations Committee just approved an amendment that would permit doctors at the U.S. Department of Veterans Affairs to recommend that veterans be prescribed marijuana for medicinal purposes in states where this is legal. With medical marijuana legal in 36 states, this promises to be a big boost for the cannabis companies, no matter what other provisions make it into the final bill.  

It's just that, to my mind at least, the news on the not-quite-marijuana front is even more optimistic.

As MM also reports today, the Senate Appropriations Committee has also approved amendments that encourage the U.S. Department of Agriculture, Food and Drug Administration, and other federal agencies "to reconsider 'arbitrary' THC restrictions on hemp and continue efforts to develop a regulatory pathway for CBD products," potentially permitting the production of more potent CBD products.

Additionally, MM notes that the committee "wants to make sure that hemp farmers and businesses are eligible to participate in insurance and loan programs" -- another move that would boost businesses such as Charlotte's Web, which rather than producing marijuana per se, focuses on the production and distribution of "hemp-based cannabidiol wellness products."  

Now what

If one assumes that VA doctors permitted to prescribe actual marijuana to their patients would also be permitted to prescribe CBD (as seems reasonable), then it appears all of today's news benefits Charlotte's Web, while only some of it benefits marijuana companies like Aurora and Canopy Growth.

And if that realization grows, the gains for Charlotte's Web stock in particular could be just beginning.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Charlotte's Web Holdings. The Motley Fool recommends Charlotte's Web. The Motley Fool has a disclosure policy.

Stocks Mentioned

Charlotte's Web Stock Quote
Charlotte's Web
$0.56 (-9.86%) $0.06
Aurora Cannabis Stock Quote
Aurora Cannabis
$1.13 (-6.61%) $0.08
Canopy Growth Stock Quote
Canopy Growth
$3.24 (-10.25%) $0.37

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

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