Cannabis Stocks Popping on US legalization, Rosy Outlook
Cannabis stocks are making big gains but this time rally is not fueled by Reddit day traders.
North American cannabis index, which tracks the performance of top US and Canadian cannabis stocks, surged to the highest level in the last eighteen months – driven purely by strengthening fundamentals and aggressive M&A activities in the emerging sector.
The newly elected president and democrats majority in Senate is paving the path for lifting the federal ban on marijuana.
Shares of the most struggling weed producers Aurora Cannabis (NYSE: ACB) soared close to 65% this year, while the only large capped marijuana giant Canopy Growth (NYSE: CGC) saw a growth of almost 80% year to date.
Meanwhile, merger and acquisition activities along with prospects for greater institutional investment are adding to investor’s sentiments.
“Over the next six months, there’s an expectation of more capital coming into the industry because it will now be investable to institutional players, and institutional bankers will help bring more capital into the industry,” Tim Seymour, the founder, and chief investment officer of Seymour Asset Management, said.
The stock prices of Jazz Pharmaceuticals (NASDAQ: JAZZ) is popping since it announced to buy the medical marijuana company GW Pharmaceuticals (NASDAQ: GWPH) for $7.2 billion in cash and stock.
Speculations for the possible merger between Canadian cannabis firm Aphria Inc (NASDAQ: APHA) and Tilray, Inc. (NASDAQ: TLRY) helped both stocks to jump more than 100% this year.
Rosy Forecasts Backs Pot Stocks Rally
North American cannabis sales are likely to grow around 76% in the next five years to hit $39 billion levels by 2025, according to Prohibition Partners. The firm said North American cannabis sales stood around $18 billion in 2020.
Democrats plan to lift the federal ban on recreational cannabis in the next few months as senate majority leader Chuck Schumer says they will present “a unified discussion draft on comprehensive reform” in the coming months.