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Why Aurora Cannabis, Tilray, and Sundial Growers Stocks Are Smoking Today

By Rich Smith – Aug 31, 2021 at 1:46PM

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Marijuana could soon be legal throughout Mexico.

What happened

Marijuana stocks Sundial Growers (SNDL -0.32%), Tilray (TLRY 2.18%), and Aurora Cannabis (ACB -2.86%) are all hopping in afternoon trading on Tuesday. As of 1:05 p.m. EDT, Sundial was up a solid 4.2%, Tilray had gained 5%, and Aurora Cannabis led the pack with a 5.2% gain.

To find out why, we need to look south of the border.

Mexican flag emblazoned with a marijuana leaf and the words LEGALIZE MARIJUANA

Image source: Getty Images.

So what

As you're probably aware, the fate of marijuana legalization legislation in the U.S. is still up in the air, stalled while Senate Democrats try to figure a way to pass a law that does not currently have the votes to pass. But the picture is a bit brighter down in Mexico.

In Mexico, the Supreme Court has already ruled that it is unconstitutional to ban personal use (and even cultivation) of marijuana. Logistically, Mexico's Congress still hasn't quite managed to pass a law decriminalizing cannabis, but that could soon change, reports today.

Already, in the last legislative session, both Mexico's Senate and its Chamber of Deputies passed laws legalizing cannabis (although they were not quite in sync). In a statement Monday, Sen. Julio Ramón Menchaca Salazar of the majority Morena Party promised to put harmonizing the two bills on the agenda for the new legislative session that begins tomorrow.

Now what

What will this mean for marijuana stocks? On the one hand, assuming legislators take up where they left off last session, it could soon become legal in Mexico for persons 18 years or older to grow their own marijuana (as many as six plants per citizen), which might not be great news for commercial demand.

On the other hand, for folks who prefer to outsource their agriculture, and buy marijuana rather than grow it, the law would permit people to buy, possess, and use up to 28 grams (or 1 ounce) of cannabis at a time.

That's the same possession limit as you will find in California or Colorado, for example. And it suggests that Mexico is now on the cusp of becoming the next big (legal) market for weed.

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

Stocks Mentioned

Aurora Cannabis Stock Quote
Aurora Cannabis
$1.36 (-2.86%) $0.04
Sndl  Stock Quote
$3.12 (-0.32%) $0.01
Tilray Brands Stock Quote
Tilray Brands
$4.68 (2.18%) $0.10

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

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