What happened

Cannabis investors today are reacting to a historic development in the industry on Friday. The stocks of Canada-based marijuana companies Tilray Brands (TLRY -1.77%), Aurora Cannabis (ACB -7.79%), and SNDL (SNDL -3.70%) (formerly Sundial Growers) all jumped early Monday. Tilray shares soared nearly 12%, while Aurora and SNDL stocks were up between about 6% and 7% in early trading.

Those gains didn't hold, but more good news might be coming for these stocks before the end of the year. As of 3:02 p.m. ET today, Tilray shares were up 0.2%, SNDL was lower by 1.1%, and Aurora shares had dropped by 2.9%. 

So what

On Friday, President Joe Biden signed the Medical Marijuana and Cannabidiol Research Expansion Act into law. That marked the first time in U.S. history that an individual federal cannabis-reform bill was made into law. The new law, the White House says, "establishes a new registration process for conducting research on marijuana and for manufacturing marijuana products for research purposes and drug development." But further hope for additional federal action in the cannabis sector before the year ends boosted the sector today. 

marijuana leaf on several $100 bills.

Image source: Getty Images.

Now what

Senate Majority Leader Chuck Schumer, a New York Democrat, also hopes the Senate will pass two additional cannabis sector bills before the holiday break, reports Barron's. One bill would allow federally regulated banks to serve businesses in the marijuana sector. The second would allow for federal grants to state and municipal programs toward expunging the records of those convicted for simple marijuana possession.

Schumer plans to include them with other legislation that is expected to pass in the Senate. That should help ensure they make it to the president's desk to sign since the House of Representatives should go along. That body has already previously passed legislation for marijuana banking reform. 

Stocks of the Canadian firms were moving higher today because they especially stand to gain from cannabis banking reform in the U.S. Tilray has already built up a set of U.S.-based businesses that would provide infrastructure and a conduit for marijuana sales upon legalization. Those businesses include several craft brewers, the Breckenridge Distillery spirits maker, and hemp products company Manitoba Harvest. Tilray has said those U.S.-based businesses are currently profitable in their own right. 

Aurora has a different strategy of focusing on growing its international medical marijuana businesses. It hopes the growing success of medical cannabis globally will lead to increasing legalization of consumer markets. 

As U.S. legislators seem to slowly be making progress toward relaxing cannabis laws, and an increasing number of states have legalized recreational use on their level, investors are betting there are plenty of companies even outside the country to benefit from an open U.S. market.