Green Gold Rush: Here's What's Driving Cannabis Stocks Higher

cannabis plants, leaves of a marijuana

Key Points

  • Several cannabis stocks surged dramatically over the previous month, igniting the sector as gains reached double- to even triple-digits in some cases.
  • Vice President Kamala Harris supports federal marijuana legalization and urged the DEA to reschedule the drug.
  • Germany passed a law fully legalizing marijuana, effective April 1, including possession, home growing, and distribution among social clubs.
  • 5 stocks we like better than Canopy Growth

Various themes and sectors garnered buzz and attention as the first quarter drew to a close. However, one industry that has been in a lull for a significant period reignited the imagination and hope of longstanding investors after it finished the first quarter in style. 

Over the previous month, several cannabis stocks have surged dramatically, igniting the sector as gains reached high double to even triple-digits in some cases. Cannabis companies like Canopy Growth NASDAQ: CGC, Tilray NASDAQ: TLRY, and Aurora Cannabis NASDAQ: ACB have experienced notable upticks in volume and price, leaving investors at a potential crossroads. Is it time to exercise some caution and take risk-off after the swift and extreme move higher, or should one dive straight into the green gold rush?

Let’s examine each of the stocks mentioned above more closely and understand what drove their recent gains.

The Catalyst Behind the Breakout

So, what catalyst was behind the extreme move in the sector that seemingly awoke several cannabis stocks from their lengthy lull period? Well, there were two separate catalysts, both carrying significant momentum.

First, Vice President Kamala Harris reportedly advocated for the legalization of marijuana during a closed-door meeting at the White House in mid-March. She also called for the U.S. Drug Enforcement Administration (DEA) to reschedule marijuana, citing its current classification as a Schedule I drug as "absurd." Since joining the Biden ticket, these comments marked the first time that Harris signaled support for federal legalization, potentially influencing the administration's stance ahead of the presidential election.


Then, and arguably the most significant catalyst, was when Germany passed a law to fully legalize marijuana, effective April 1, allowing possession, home growing, and distribution among social clubs. This news could benefit investors in cannabis stocks like Tilray, Cronos, and Canopy Growth, particularly when Germany moves forward with laws to standardize commercial production and retail sales of cannabis.

3 Cannabis Stocks Making Moves

Tilray NASDAQ: TLRY

Tilray, a pharmaceutical and cannabis company established in 2013, is based in Canada and operates globally in regions like the United States, Europe, Canada, Australia, and Latin America. They specialize in the production and distribution of medical and recreational cannabis products.

TLRY staged an impressive turnaround in the previous month, with the stock up almost 43%. Interestingly, insiders have purchased stock for the first time in recent years, with insiders buying $183,210.00 of stock in the first quarter of the year. Based on three analyst ratings, Tilray has a Hold rating. Analysts’ consensus price target of $2.83 is forecasting a potential upside of close to 15% for the cannabis company. 

Canopy Growth NASDAQ: CGC

Canopy Growth specializes in cultivating and distributing a wide range of cannabis products, serving both medical and recreational users. From dried cannabis to oils, soft gel capsules, and edibles, Canopy Growth offers diverse options to meet customer needs.

Canopy’s recent stock performance has been remarkable, with the stock soaring 162% in the last month. Its volume has also surged to incredible heights, with the stock trading close to 200 million shares over the previous four trading sessions. However, Analysts are bearish on the stock, with a reduced rating and consensus price target predicting close to 44% downside. 

Aurora Cannabis NASDAQ: ACB

Aurora and its subsidiaries produce, distribute, and sell cannabis and cannabis-derived products globally. They operate in three segments: Canadian Cannabis, European Cannabis, and Plant Propagation. 

Like the above two names, Aurora's shares garnered substantial attention over the previous month. The stock surged by almost 40% during the last month, with its volume rocketing higher. Sentiment appears overwhelmingly bearish on the name, with a significant short interest of 24.5%, representing 3.8 million shares, as of March 15. 

Should you invest $1,000 in Canopy Growth right now?

Before you consider Canopy Growth, you'll want to hear this.

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Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
Aurora Cannabis (ACB)
0.2284 of 5 stars
$7.20-3.0%N/A-2.48BuyN/A
Tilray (TLRY)
1.4237 of 5 stars
$1.84flatN/A-4.18Hold$2.71
Canopy Growth (CGC)
0.8249 of 5 stars
$8.97-0.7%N/A-0.59Reduce$4.87
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Ryan Hasson

About Ryan Hasson

  • Ry.has7@gmail.com

Contributing Author

Technical Analysis, Momentum Trading, Risk Management

Experience

Ryan Hasson has been a contributing writer for MarketBeat since 2023.

Areas of Expertise

Equity research and analysis, technical analysis and price action, market sentiment and underlying themes, risk management and trading psychology

Education

Bachelor of Commerce in Financial Management

Past Experience

Equities trader, Kershner Trading Group, business analysis consultant, SMB Capital

Zoom International: Business Analysis Consultant.


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