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Marijuana Stocks Soar Again As Wall Street Eyes U.S. Imports

Ryan McQueeney
Shares of several popular Canadian marijuana producers--including Tilray (TLRY), Canopy Growth (CGC), and Cronos Group (CRON)--were surging once again on Wednesday as Wall Street grows ever-more bullish on the prospects of legalization and U.S. imports.

Shares of several popular Canadian marijuana producers—including Tilray TLRY, Canopy Growth CGC, and Cronos Group CRON—were surging once again on Wednesday as Wall Street grows ever-more bullish on the prospects of legalization and U.S. imports.

This morning’s rally was led by Tilray, which opened a staggering 50% higher—just one day after gaining nearly 30% in a session and adding to a recent run of momentum which has seen the company skyrocket to a market valuation of over $17 billion.

Tilray’s latest move comes in the wake of the company’s announcement that it has received DEA approval to import pot to the U.S for medical research. The Nanaimo, Canada-based company will work with the University of California San Diego Center for Medicinal Cannabis Research to study the efficacy of marijuana for a neurological disorder.

“Clinical trials build a halo around the brand. They inspire confidence and trust with physicians and regulators around the world and they give us data and information to talk to pharmacists and physicians that they just can't obtain from our competitors” said Tilray CEO Brendan Kennedy, via CNBC.

Kennedy on Tuesday also went on to tell CNBC’s Jim Cramer that he thinks pharmaceutical companies should consider working with cannabis producers as a “hedge” against their industry.

“Cannabis is a substitute for prescription painkillers, prescription opioids, and so if you're an investor in a pharmaceutical company or you're a pharmaceutical company, you have to hedge the offset from cannabis substitution,” the chief executive said.

The bullishness surrounding Tilray lifted the other pure-play marijuana stocks, with Canopy Growth adding nearly 7% on Tuesday and Cronos Group surging more than 13%. Both companies were also rallying again on Wednesday morning. Shares of GW Pharmaceuticals GWPH, a biotech company developing cannabinoid treatments, has gained nearly 9% since Friday’s close.

The next major event for marijuana investors comes next month, when recreational cannabis will officially become legal in Canada. The Canadian government passed Bill C-45, also known as the “Cannabis Act,” in June.

The new federal law sets the basic framework for Canada’s legal pot industry, establishing the minimum age for consumption at 18 years and limiting plant cultivation to four per home, per adult. Bill C-45 will got into effect on October 17 after giving individual provinces and territories time to establish their own rules.

In the meantime, investors can expect the aforementioned Canadian producers to continue making headlines. There are plenty of pure-play options trading on Canadian and over-the-counter exchanges, but only a few names have successfully listed in the U.S., and they now have the added benefits that come with that status.

Wall Street is also likely to continue searching for exposure to the marijuana industry in other avenues. Just this week, e-commerce platform provider Shopify SHOP was the subject of a bullish analyst note which described the company as a top choice for provinces and producers looking to facilitate online sales.  

Want more market analysis from this author? Make sure to follow @Ryan_McQueeney on Twitter!

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Shopify Inc. (SHOP) : Free Stock Analysis Report
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