Shares of Canopy Growth Corp. continued their rocket ride Monday to break above the $1 level for the first time since May, as cannabis optimism builds from retail investors in the wake of a historic move to re-schedule marijuana.
Canopy’s stock
CGC,
ran up 81.4% to $1.69, which marks its biggest-ever one-day gain, according to FactSet data. It has blasted 333% higher over the past 10 trading sessions.
It wasn’t just Canopy’s stock that enjoyed a bid up day, as the AdvisorShares Pure U.S. Cannabis ETF
MSOS
hiked up 10.0% and the ETFMG Alternative Harvest ETF
MJ
climbed 17.6%.
Among other individual names, shares of Curaleaf Holdings Inc.
CURLF,
rallied 9.6%, of Verano Holdings Corp.
VRNOF,
rose 3.5%, of Trulieve Cannabis Corp.
TCNNF,
jumped 11.6%, of Green Thumb Industries Inc.
GTBIF,
advanced 9.9%, of Cresco Labs Inc.
CRLBF,
tacked on 8.1% and of Tilray Brands Inc.
TLRY,
powered up 9.6%.
A move by the Drug Enforcement Administration to review the Schedule I status of cannabis has fueled optimism in the sector in the past week.
The DEA is taking up the issue after the U.S. Department of Health and Human Services last week recommended that cannabis be re-classified to Schedule III, which would legalize cannabis for regulated medical use under federal law.
Also read: HHS recommends rescheduling cannabis, and stocks in the sector rally
While there’s debate over how that will help cannabis companies, most experts agree that the 280E tax rule that prevents plant-touching businesses from writing off typical business expenses will no longer apply, in a boost to the business.
In other potential moves that could help the sector, Attorney General Merrick Garland has also said he’s working on an updated version of the Cole memo, which instructs federal law enforcement agencies to not interfere with state-run cannabis programs.
Some members of Congress are also optimistic that the SAFE Banking legislation to open up the financial system to cannabis could go to the Senate for a vote for the first time after 10 years.
Also read: Cannabis stocks gain as banking bill finds traction in Senate, but House OK looks challenging
Germany is also moving toward an adult-use cannabis program. On Wednesday, Canopy Growth said Canopy Growth Germany GmbH will operate under the name Canopy Medical in the German market, having previously been called Spectrum Therapeutics.
Cannabis stocks have been out of favor for institutional investors since most avoid contact with plant-touching businesses because of the current federal classification of pot as a Schedule I substance with no medical value.
That leaves the sector mostly in the realm of retail investors, who have mostly fled the sector in 2022 and 2023 partly because of a lack of movement on ending federal prohibition.
Jefferies analyst Owen Bennett said Monday that most of the upside in cannabis stock has been driven by retail investors.
“As we have explained before, the opportunity for stocks to potentially double again from here — and likely much more — is institutional involvement, which still remains minimal,” he said.
Also read: Medical-cannabis companies blast New York for ‘clear course for failure’ in state pot-business rollout
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