Aurora leads cannabis sector rally fueled by hopes for reform under President-elect Joe Biden
Aurora Cannabis Inc. led a rally in the weed sector Tuesday, that was fueled by hopes President-elect Joe Biden, finally cleared to move ahead with his administration’s transition, will push for reforms that will let companies access banks and capital markets.
There was further excitement about the news that Mexico’s Senate has approved a cannabis bill that would create the world’s biggest single market if it also passes the lower House of Congress.
Aurora ACB,
Media called the election for Biden on Nov. 7, but incumbent President Donald Trump has refused to concede, has made unsubstantiated claims that there was election fraud and attempted to sue state electoral officials and others. The GSA move now clears the way for Biden to start to coordinate his pandemic response with current administration officials and to receive security briefings.
See also: Aurora Cannabis plans to sell more stock
Biden and his Vice President Kamala Harris are widely held to be more in favor of reforming the U.S.’s strict cannabis laws which continue to classify the substance as a Schedule I drug, alongside heroin. That classification has hampered the development of the sector which is confined to those states that have legalized cannabis for medical or recreational use and kept companies locked out of the federally insured banking system.
See: As pot stocks boom on hopes for U.S. legalization, Canadian cannabis companies struggle for growth
“What we really need is a loosening of regulations,” said Rob DiPisa, co-chair of the Cannabis Law Group at law firm Cole Schotz. “We need legislation similar to the state banking act to permit cannabis companies to have access to banking and insurance.”
Hopes for reform were also boosted by the success in November ballots of cannabis measures in New Jersey, Arizona and South Dakota, where voters approved adult-use cannabis, and Mississippi, where they voted for medical cannabis. Those measures mean about a third of Americans now live in states that have legalized cannabis for recreational use.
Stocks were also boosted by the news of Mexico’s legalization bill, which comes after months of delays. Mexico is taking a new approach to its drug problem, which has seen about 250,000 of its citizens murdered by drug cartels ever since a government crackdown started under former President Felipe Calderón.
“The pending law still faces some hurdles before doors are fully open to business opportunities in Latin America’s second-largest consumer market,” Benchmark analyst Mike Hickey wrote in a note.
Mexico will be the third country in the world to fully legalize cannabis after Canada in 2018 and Uruguay in 2013.
Elsewhere in the sector, Canopy Growth Corp. CGC,
GrowGeneration Corp. GRWG,
The company is well positioned to achieve $1 billion sales in the next three to five years, while building a network of 250 stores.
“GrowGeneration’s positioning in the hydroponics category, and the opportunities/risks of U.S. federal cannabis reform,” they wrote. “We continue with our Buy rating and $32 target price.”
Cannabis software provider Akerna Corp. KERN,
The Cannabis ETF THCX,
