Most of Canada's top cannabis stocks are off to a strong start this week. For example, as of 11:29 a.m. ET Monday morning, Aurora Cannabis (ACB -1.20%) shares were up by a heady 8%; Canopy Growth's (CGC 4.09%) stock price was higher by 10.9%; and Sundial Growers' (SNDL 2.84%) equity was popping by a respectable 3%.
What's lighting a fire underneath these beaten-down cannabis equities today? Investors appear to be bidding up Aurora, Canopy, and Sundial Growers' stock prices this morning on a possible Senate vote on the Cannabis Administration and Opportunity Act (CAOA) that would essentially legalize marijuana at the federal level inside the United States.
As reported by Bloomberg mews last week, Senate Democrats are considering introducing this bill aimed at decriminalizing marijuana on the federal level sometime this week. As the U.S. cannabis market is thought to be worth more than $100 billion in annual sales, it's no surprise to see Aurora, Canopy, and Sundial Growers reacting positively to this remote possibility. Each of these companies, after all, has placed a heavy emphasis on entering the U.S. market once federal prohibition on cannabis comes to an end.
The bad news is that there has already been some pushback on Capitol Hill regarding the exact timing of the bill's introduction. In fact, Democrats have only promised to get CAOA in front of the Senate for a formal vote before the body's next recess in August.What's important to understand is that lawmakers have made similar promises regarding a possible CAOA vote in the past. So far, though, this landmark piece of marijuana legislation has never seen the light of day.
On the bright side for marijuana investors, Senate Democrats may have no choice other than to sally forth with this imperfect bill's introduction sometime soon. Pro-marijuana Democrats, after all, are deeply concerned that the rapidly approaching midterm elections will ultimately result in a Republican-controlled congress. A sea change in the political landscape would likely be bad news for marijuana reform. Speaking to this point, the majority of Republicans have shown little interest in even discussing cannabis-related legislation.
All that being said, the odds of CAOA actually passing during the current session are slim to none, according to various political pundits. Cannabis investors, in turn, may want to be careful about buying these high-flying names on this political speculation.