What happened
The stock market as a whole had a very good session Monday, but marijuana stocks had an excellent one. Some shot as high as the double digits in terms of percentage gain on the day while trouncing the S&P 500's gain.
Among Monday's winners were prominent U.S.-based multistate operators (MSOs) Curaleaf Holdings (CURLF -5.94%) and Green Thumb Industries (GTBIF -5.60%), which rose a respective 3% and 3.5%. Meanwhile a frequent laggard in the sector, cannabidiol (CBD) specialist Charlotte's Web Holdings (CWBHF -3.23%), was a surprise double-digit gainer, with an outsized 14% rise on the day.
Image source: Getty Images.
So what
Despite the big stock market rally we witnessed on Monday, many investors and pundits believe that numerous sectors -- hello, tech! -- are vastly overvalued. As a result, people are looking for bargains, and the beleaguered marijuana sector certainly fits the bill.
Those bargain-hunters were also likely encouraged by a pair of not-necessarily major developments. The first was an article in pot industry news/analysis website MJBizDaily.com. This pointed out that the push to decriminalize or fully legalize marijuana in the U.S. is uniting politicians and lobbyists from various points on the political spectrum.
Another development is occurring in Virginia, where legistlators are introducing new bills to change the recreational marijuana law passed in 2021. Among other positive measures, these bills would open the recreational market sooner than the 2024 start enshrined in the law, and cut the overall tax rate on such products to 10% from 21%.
Now what
Taken separately, neither of these items is particularly impactful to U.S. pot stocks, although Green Thumb is a bit of an exception as it is already an operator of dispensaries in Virginia. Rather, both are indicative of the widespread, top-to-bottom support cannabis law reform enjoys in this country.
Later, rather than sooner, all types of marijuana consumption and sale will be at least de facto legal in this country. And nearly every weed company, particularly those already well entrenched in the U.S. market, should benefit commensurately.
