New York is its governor's signature away from legalizing marijuana for recreational use after the state's senate voted on Tuesday evening to legalize possession of small amounts and eventually allow sales to people over the age of 21.
Gov. Andrew Cuomo, who earlier had been lukewarm toward legalizing marijuana, said Tuesday night that he intended to sign the bill.
Cannabis stocks jumped on the news:
- Tilray (TLRY) - Get Report shares were up 4.2%
- Canopy Growth (CGC) - Get Report shares climbed 2.1%
- Sundial Growers (SNDL) - Get Report rose 2.6%
- Cronos Group (CRON) - Get Report gained 1.3%
- Aurora Cannabis (ACB) - Get Report added 2.1%
- Aphria Inc. (APHA) - Get Report gained 4.1%
- Hexo Corp. (HEXO) - Get Report rose 1.7%
- Organigram (OGI) - Get Report moved up 3.2%
The New York Senate voted 40-23 in favor and the Assembly approved the bill 100-49.
The move could bring in about $350 million a year in taxes for New York once recreational cannabis is fully legalized.
New York would be the 16th state, plus the District of Columbia, to fully legalize marijuana after decades of imprisoning people who participated in the cannabis black market.
About one in three Americans live in a state with legal sales of recreational cannabis, according to the Institute on Taxation and Economic Policy.
Cannabis is still illegal at the federal level, which has contributed to volatility for stocks in the sector.
"It's not that it's fully federally legal, but it's really, frankly, an opportunity for investors," Tim Seymour of Amplify Seymour Cannabis ETF (CNBS) - Get Report said of investing in cannabis stocks.
"The capital markets around the industry will allow these companies more access to capital and cheaper cost of capital that they can list on the New York Stock Exchange and the Nasdaq," Seymour said.