Marijuana stocks are flying high again. It’s not just Reddit.


Some of the retailers on Reddit’s WallStreetBets forum that helped generate

GameStop

The brief parabolic burst in stocks has set its sights on public cannabis companies.

US Producer Shares

Curaleaf Holdings

(CURLF),

Green Thumb Industries

(GTBIF) and

Cresco Laboratories

(CRLBF) jumped between 4.5% and 7.5%. Cantor Fitzgerald analyst Pablo Zuanic said Barron that Canadian stocks have recently outperformed US Multi-State Traders, or MSOs, which could indicate a lot of interest from amateur Robinhood investors. Robinhood does not offer OTC stock trading, although other online brokers such as

Charles schwab

do.

“We believe that much of this can be attributed to retail investors who decide to pursue GME-type opportunities in cannabis,” he wrote. “Also, MSOs are less liquid and trade OTC, while Canadians are listed on US exchanges.”

Marijuana stocks have been on a roll for months.

Alternative Harvest ETFMG

(MJ), an exchange-traded fund with exposure to cannabis companies, has risen in seven of the past eight days, including three straight days of gains that took it up 42%. It’s up 131% to date, according to Dow Jones Market Data. That includes a 15% pop on Wednesday at $ 33.21, its highest close since May 2019.

These are some of the factors that move marijuana stocks.

Reddit’s search for the next great work. Over the past two weeks, the most popular posts on the WallStreetBets forum were mostly related to moves in your favorite deprecated stocks, namely GameStop (GME). While some reports linked the forum posts to a movement in silver futures, several highly voted posts rejected that narrative. At the time, GameStop was still the focus.

But not on Wednesday. A website that tracks stock quote mentions in the forum found

Sundial Cultivators

was the most popular Wednesday, pushing GameStop to No. 2. Aphria and Tilray were the third and fourth most mentioned tickers.

Canopy growth

Y

Cannabis Aurora

they both just cracked the 12 most discussed tickers.

Alternative data companies have been rolling out services to track stock market sentiment on Reddit forums. Web-crawling company Thinknum said Barron Last month its newly launched product that tracks New York Stock Exchange and Nasdaq tickers on the WallStreetBets and Stocks Reddit pages had already attracted the interest of dozens of hedge funds. It is quite possible that the professionals who followed the forum helped amplify the movements of the most mentioned actions.

A changing political landscape. The recent rally in cannabis stocks began around the 2020 election. Allowing or expanding legal marijuana was on the ballot in a handful of states, all of which won. President Joe Biden’s victory also helped. Biden has said he supports the decriminalization of cannabis.

The Georgia Senate runoff in January also boosted marijuana stocks. By winning both seats, the Democrats took control of both houses of Congress. With Mitch McConnell, a cannabis critic, now Senate minority leader, he will have a harder time blocking marijuana legislation.

Prominent Legislators Commitments. Democratic control of Congress and the White House is one thing. But cannabis legislation will have to compete with other priorities, such as Covid-19 relief, healthcare reform, and corporate tax increases.

However, last week, Senate Majority Leader Chuck Schumer (D., NY) issued a joint statement with Democratic Senators Cory Booker of New Jersey and Ron Wyden of Oregon in which they said they plan to present and promote “comprehensive cannabis reform legislation”.

Wyden told Yahoo! Finance on Tuesday that he believes Republicans are “trying to reconcile some of the views they have long held” with the fact that cannabis is popular with voters. Republican Rep. Matt Gaetz of Florida touted voter support when he co-sponsored a bill decriminalizing marijuana.

First US Marijuana IPO. On Tuesday, Green Thumb Industries announced the first initial public offering of cannabis in the U.S. While the company is still unable to list shares on the New York Stock Exchange or Nasdaq, the Securities and Exchange Commission declared the registration of Green Thumb. It was a self-funded offering of $ 100 million to a single institutional investor.

Andrew Partheniou, an analyst at Stifel GMP, said the announcement “further reinforces our thesis of the attractive investment opportunity present in the US cannabis industry.”

“It appears that institutional investors are finding ways to access the US cannabis opportunity despite the fact that US traders’ stocks are traded on the US CSE and OTC markets with relatively limited liquidity,” he wrote. “Additionally, it appears that the perceived risk profile arising from the conflict between federal and state laws, which has also reduced the availability of custodians operating in the industry, has not deterred investor enthusiasm.”

Cannabis deals are heating up. One of the reasons Canadian marijuana stocks faltered in the year following the launch of legal sales was a combination of inflated expectations, limited stores, and a lot of competition in the space. Meanwhile, in the United States, the largest cannabis company, Curaleaf, has a market share of about 8%, according to Zuanic.

Such a crowded field has led to speculation about consolidation. In December, the announcement of the merger of Aphria and Tilray set the stage for creating the largest company that sells marijuana, sending both stocks higher. Aphria said earlier this year that it expects the merger to close in the first half of the year. On Tuesday, Tilray announced a deal with Grow Pharma to import and distribute medical marijuana in the UK.

“As demand continues to increase in the UK, Tilray is well positioned to be a leading supplier of medicinal cannabis products,” said Sascha Mielcarek, Tilray’s managing director Europe, in a press release. “Regulations are progressing as more and more countries in Europe recognize the benefits of medicinal cannabis and its potential to improve the quality of life for patients.”

Write to Connor Smith at [email protected]

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