Please ensure Javascript is enabled for purposes of website accessibility
Free Article Join Over 1 Million Premium Members And Get More In-Depth Stock Guidance and Research

Why Curaleaf, Hexo, and Green Thumb Stocks Popped

By Rich Smith - Nov 24, 2021 at 2:48PM

Key Points

  • Germany is getting a new marijuana-friendly government.
  • Full-scale marijuana legalization is on the agenda in Germany now.
  • With $1 billion euros in new tax revenue on the line, Germany's move could encourage other European governments to follow suit.

Motley Fool Issues Rare “All In” Buy Alert

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

Germany will legalize marijuana.

What happened

Here in the United States, marijuana stocks, and the Congressional effort to get marijuana legalized, are all the rage -- but as reminds us today, the marijuana market is bigger than just the United States.

Germany wants to legalize marijuana too, and that prospect is helping to lift marijuana stocks today. In noonday trading, ET, shares of Hexo ( HEXO -0.89% ) stock are heading 6.6% higher, followed by Curaleaf Holdings ( CURLF -1.69% ) and Green Thumb Industries ( GTBIF -0.99% ) -- up 3.3% and 2.9%, respectively.

German flag emblazoned with a marijuana leaf, a green cross, and a checkmark

Image source: Getty Images.

So what

Over in Germany, conservative Christian Democratic Union Chancellor Angela Merkel is out of office, and the coalition of three German parties that will choose her replacement includes the liberal Free Democratic Party, the center-left Social Democrats, and the environmentalist Green party. As MarijuanaMoment reports, these three parties are in broad agreement that marijuana should become legal in Germany.  

In a policy statement, the parties say they are "introducing the controlled supply of cannabis to adults for consumption in licensed stores," alongside implementing "controls" over product "quality" and "protection of minors." All of this will expand access to the drug beyond existing permission for its use for medicinal purposes (although advertising of marijuana will be restricted).

Now what

What does legalization in Germany mean for American and Canadian cannabis companies? Honestly, not a whole lot. Of the three stocks moving today, only Curaleaf has any real exposure to the German marijuana market -- and even Curaleaf, like Green Thumb, is mostly an American operation. (According to S&P Global Market Intelligence, Hexo gets most of its revenue from Canada). 

Still, there's one more aspect of this news that bears mentioning: The new government coalition in Germany anticipates that legalizing marijuana will generate some 1 billion euros (about $1.2 billion) in annual tax revenue. 

That's a big draw for a German economy that has been battered by Covid-19. It's also an observation that pops up repeatedly in initiatives to legalize marijuana at both the state and federal levels here in the U.S. Pennsylvania alone, for example, thinks that legalizing marijuana within that state could generate $1 billion in annual tax revenue, and a planned federal marijuana tax levy of 3% could generate even more money at a national level.

The more governments realize that legalizing marijuana can be a big source of income, the greater the prospects for marijuana legalization will become -- at the state, the federal, and even the international levels.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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

HEXO Stock Quote
$1.11 (-0.89%) $0.01
Green Thumb Industries Stock Quote
Green Thumb Industries
$21.59 (-0.99%) $0.21
Curaleaf Holdings, Inc. Stock Quote
Curaleaf Holdings, Inc.
$9.54 (-1.69%) $0.16

*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 12/01/2021.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Our Most Popular Articles

Premium Investing Services

Invest better with the Motley Fool. Get stock recommendations, portfolio guidance, and more from the Motley Fool's premium services.