Shares of the only large capped weed company, Canopy Growth (NYSE: CGC), rallied more than 7% on Wednesday, extending year-to-date gains to 82%. GW Pharmaceuticals’ (NASDAQ: GWPH) stock price soared more than 44% on Wednesday after Jazz Pharmaceuticals (NASDAQ: JAZZ) announced to acquire the medical marijuana company for $7.2 billion in cash and stock. Shares of Canadian cannabis firm Aphria Inc (NASDAQ: APHA) soared more than 130% year to date amid speculations about the merger with Tilray, Inc. (NASDAQ: TLRY). Investors are also showing confidence in Aurora Cannabis (NYSE: ACB); the price per ACB share surged by 29.04% from $10.19 to $13.15 over the last 30 days. Cannabis stocks rally also gained momentum on expectations for increased institutional investments and strong growth forecasts for the upcoming years.
The government backing and positive forecasts adding to upside momentum
The sharp cannabis stock momentum is also backed by double-digit growth expectations. Cannabis sales in North America reached $18.1 billion in 2020, with expectations that sales will increase around 76% in the next five years to reach $39.1 billion levels by 2025, according to a recent Prohibition Partners report. The government backing is the major catalysts for sales growth in the years ahead. Three senators, including Senate majority leader Chuck Schumer, said they would present “a unified discussion draft on comprehensive reform” in the coming months, and the passing of that bill will be a priority for the senate. What’s more, American people also like to see cannabis legalization as Gallup poll in November hinted that 68% of Americans supported marijuana legalization.
