What happened

Canadian cannabis stocks soared Monday morning, with Tilray Brands (TLRY -4.21%), Canopy Growth (CGC -4.29%), and Aurora Cannabis (ACB -3.37%) spiking between 11% and 17% in earlier trading. As of 1:50 p.m. ET, Tilray remained up 6.3%, while Canopy Growth and Aurora were 16.5% and 7.1% higher, respectively. 

So what

The jumps come as there continues to be hope for some level of marijuana legalization legislation making it through the U.S. Senate this year. But today's catalyst may have been an interview given by Tilray CEO Irwin Simon over the weekend. Simon told Yahoo! Finance that he believes legalization in the U.S. would open up a $100 billion opportunity for Canadian growers. Simon added that a legal cannabis market would have tangential products including food, beverages, and personal care products. 

Now what

Democrats introduced a bill to decriminalize the drug at the federal level, and negotiations are ongoing among senators. There's no indication that an agreement is close, but Simon believes the U.S. will eventually pass some version of legalization. He pointed to the benefits realized in Canada when adult-use cannabis was legalized. 

The Tilray CEO said that in less than four years since legalization in Canada, the sector has contributed about $20 billion in taxes, created over 150,000 jobs, and led to $6 billion in related infrastructure projects. 

The U.S. House of Representatives passed the SAFE Banking Act last month as an amendment to the 2023 National Defense Authorization Act. But that is just the latest passage in the House with it never making progress in the Senate. Matt Darin, CEO of U.S.-based Curaleaf, echoed Simon's comments: "We're very encouraged by what's coming out of Washington, D.C. currently. There's never been more bipartisan support for sensible reforms."

Currently, 19 states and Washington, D.C., have legalized adult use. While reforms on the federal level may not come from this congressional session, the Canadian companies aren't waiting to prepare. Tilray acquired craft brewer SweetWater Brewing, Breckenridge Distillery, and hemp products company Manitoba Harvest to help establish infrastructure in the U.S., and it says those brands are profitable in their own right.

Canopy Growth has said its BioSteel health and hydration drink brand is accelerating toward profitability. BioSteel revenue surged 169% year over year in Canopy's fiscal 2023 first quarter ended June 30, 2022. It has been expanding partnerships with sports leagues and Walmart. Canopy also has a partnership with Martha Stewart for CBD wellness gummies. 

Simon's optimism over the weekend was contagious in today's trading. Even shares of struggling grower Aurora Cannabis are moving higher. Aurora dropped into penny stock territory this year, but progress toward federal legalization in the U.S. could recapture investors' interest.