Cannabis was a big winner from the results of the United States' election, and industry stocks are soaring on both the voting results and recent earnings. Companies such as Canopy Growth Corporation, Tilray and Aurora Cannabis are seeing their valuations pop in pre-market trading as good news for the industry adds up.
Some companies are seeing double-digital gains before markets officially open. Aurora Cannabis is up more than 50% as of writing. This comes as stock market indexes worldwide are exploding on the news of a viable COVID-19 vaccine.
Recent earnings reports from Aurora Cannabis, Tilray and Canopy Growth Corporation paint a picture of a reforming industry. Over the pandemic, these companies saw interest in cannabis soar while taking painful steps in reducing human labor costs. Some companies even reported a loss over the last financial quarter, but investors clearly see a bright future.
For example, Canopy Growth is up 10% in pre-market activity, and Tilray is up 25% in pre-market action. If these levels hold when the market opens, they would set 2020 levels and match the pop cannabis stocks received after going public in 2018.
Most cannabis companies are located in Canada, and America's federal classification of cannabis hampers the Canadian companies' ability to fully interact with the American consumer. That could change. Last week, cannabis legalization was on five state ballots and won each election. On Saturday, Joe Biden was declared the winner of the presidential election, and he previously stated that he would seek to reform cannabis legislation.
Legal cannabis has never looked more likely in the United States. Investors are clearly hopeful with a Democrat in the White House.
Over the coming months, Congress is set to take on several key cannabis issues, including allowing banks to interact with cannabis companies without fear of federal actions (SAFE Banking Act). Another bill (The STATES Act) would allow states to legalize cannabis without risk of federal interaction. And The MORE Act would remove cannabis from the federal The Controlled Substance Act. Some in Washington expect the lame-duck Congress to take up these issues before the end of the session.