Cannabis stocks were surging on Wednesday amid strong financial results, new agreements, improving prospects for legalization, and attention from the online messaging platform Reddit.
Canopy Growth (CGC) - Get Report was rising 4.4%, one day after the company posted fiscal third-quarter revenue that beat analysts’ forecasts. The report came amid a recovery in demand for pot and pot-infused drink and vape products, even as the company generated a wider per-share loss.
Last week, Jazz Pharmaceuticals (JAZZ) - Get Report said it was buying cannabinoid-therapeutics company GW Pharmaceuticals (GWPH) - Get Report for $7.2 billion of cash and stock.
The activity in the cannabis sector has caught the attention of traders on Reddit.
The message platform has roiled the market for the past several weeks, as retail investors rallied around such companies as GameStop (GME) - Get Report, AMC Entertainment (AMC) - Get Report, and Inovio Pharmaceuticals (INO) - Get Report.
"The marijuana industry will be a $1T industry in 10 years once Europe and Asia are open," one Reddit poster declared. "There will be a few $100b+ companies, and my bet is Aphria/Tilray will lead the way."
Another poster, who claimed to be a longtime investor with Tilray and Aphria, (APHA) - Get Report added that "with the stupid stuff going on in the market, I still have an exit point where the valuation would become insane."
"Seriously here, I’m super bullish but 50$+ start being a bit crazy and if it gets there I'll probably start scaling out," the poster said. "Market goes completely nut and it reaches 100$? I’m out lol."
In addition, many pot investors are optimistic that the substance may be legalized at the federal level by a Democratic president, Joe Biden, and a Democratic Congress.
Canopy Growth Chief Executive David Klein said during the company’s quarterly conference call that with Democrats controlling the White House and both chambers of Congress, "we expect significant cannabis reform to take place during this Congress."
Klein noted that last week several Democratic senators said "the Senate is committed to introducing and passing powerful cannabis reform legislation."
Earlier this month, Senate Majority Leader Chuck Schumer and two other Democratic senators said that this year they would push to pass sweeping legislation that would end the federal prohibition on marijuana.
"We anticipate that this legislation will include comprehensive reform to ensure restorative justice, protect public health and implement responsible taxation while ending cannabis prohibition,” Klein said.