TLRY:CC - Why Cannabis Stocks Are Flying Higher Again Today
2023-08-31 13:24:50 ET
What happened?
Shares of marijuana companies continued to rally for a second consecutive day on Thursday. The TSX-listed shares of Tilray Brands ( TSX:TLRY ) were leading the rally in cannabis stocks this afternoon with more than 12% intraday gains, not only extending its week-to-date gains to 27% but also bringing its stock into the green territory on a year-to-date basis. At the same time, Cronos Group ( TSX:CRON ) and Aurora Cannabis ( TSX:ACB ) were up 10% and 6.2%, respectively, for the day.
So what?
Today’s big rally in pot stocks came a day after some news outlets claimed that top health officials in the United States are pushing to ease restrictions on marijuana, which could set the stage for cannabis companies like Tilray, Cronos, and Aurora to significantly expand their presence in the country.
According to a Bloomberg report published on Wednesday, a senior official at the Department of Health and Human Services (HHS) wrote to Drug Enforcement Agency (DEA) administrator Anne Milgram to recommend reclassifying marijuana in a lower-risk drug category. A DEA official acknowledged receiving the recommendation letter from the HHS, and the agency expects to soon start its own review in this matter, the news report added.
Cannabis investors welcomed this news and reacted positively by triggering a rally in publicly listed pot stocks in Canada and the United States.
Now what?
Despite making consistent efforts for years and reportedly spending millions lobbying to legalize weed, cannabis companies have so far failed to obtain the desired results. These recent developments, however, reflect how authorities in the United States are apparently taking a more serious approach toward gradually easing restrictions on marijuana at the federal level, which could give a big boost to the marijuana industry across the globe.
In its fiscal year 2023 (ended in May), Tilray noted that “upon federal cannabis legalization in the U.S., Tilray is well positioned to immediately leverage its strong U.S. leadership position and strategic strengths,” which will open new opportunities for the cannabis giant and help it further expand the revenue base.
With its well-established distribution channels and large-scale business, TLRY could potentially become one of the biggest winners if restrictions on marijuana actually ease in the U.S. in the future.
But if you are a conservative investor, you may still not want to make your investment decisions all based on speculations, as cannabis stocks are usually extremely volatile and highly sensitive to any positive or negative news because such high volatility can hugely increase your risk profile.
The post Why Cannabis Stocks Are Flying Higher Again Today appeared first on The Motley Fool Canada .
The Motley Fool recommends Tilray Brands. The Motley Fool has a disclosure policy . Fool contributor Jitendra Parashar has no position in any of the stocks mentioned.
2023