More Great News for Pot Stocks Sends Tilray Stock Soaring

TLRY Stock Climbs as Future Looks Brighter for Marijuana Stocks

This has been a transformational year for many sectors. COVID-19, after all, has caused us to rethink entire swaths of our economy. But one sector that has undergone more change than most is the marijuana industry. Pot stocks, by extension, have been rendered more volatile and unpredictable.

But in 2021, we’ve been seeing some major momentum build behind marijuana stocks, especially Tilray Inc (NASDAQ:TLRY).

Tilray stock has recently soared relative to other top pot stocks, as the following chart shows.

Chart courtesy of StockCharts.com

There are a couple reasons TLRY stock has risen.

The first reason is unique to Tilray Inc: its recent merger with Aurora Cannabis Inc (NASDAQ:ACB). With that partnership, Tilray is poised to be one of the biggest marijuana companies in the world by market cap, if not the biggest.

As it stands, Canopy Growth Corp (NYSE:CGC) maintains a lead over Tilray Inc as the largest market cap holder in the marijuana industry, but that lead has been narrowing.

As of this writing, Tilray has a market cap of about $8.4 billion. Canopy Growth Corp’s market cap is about $9.3 billion, so that gap is narrowing. That puts both of them way, way ahead of the second runner-up, Cronos Group Inc (NASDAQ:CRON), which has a market cap of about $3.2 billion.

So the Tilray/Aurora deal has paid off in that it has thrust Tilray Inc, previously a lesser (or at least second-tier) player in the industry, into the spotlight.

With that increased recognition and status, more and more capital has been flowing into the company. Many investors view Tilray stock as an up-and-coming major player—potentially even the industry leader in a few months or years—while others are excited to get in on the goodwill fostered by the Aurora merger.

The second reason TLRY stock has been rising is a recent statement by a company in an entirely different industry: Amazon.com, Inc. (NASDAQ:AMZN).

Now, you may be wondering what Amazon, the e-commerce giant, has to do with the marijuana industry.

A lot, actually.

That’s because Amazon.com, Inc. has endorsed federal marijuana legalization, on top of saying it would no longer test its employees for marijuana.

“And because we know that the issue is bigger than Amazon, our public policy team will be actively supporting The Marijuana Opportunity and Reinvestment and Expungement Act of 2021 (MORE Act) — federal legislation that would legalize marijuana at the federal level, expunge criminal records and invest in impacted communities,” wrote Dave Clark, chief executive of Amazon.com, Inc.’s Worldwide Consumer division. (Source: “Cannabis Stocks Rally After Amazon Endorses Legalization,” MarketWatch, June 2, 2021.)

This is a very big deal.

Amazon is one of the largest and most popular companies on Earth.

What’s more, by explicitly supporting pot legalization in the U.S., the company is implicitly saying it wants to get in on the marijuana delivery game. That makes perfect sense: you can already get almost anything from Amazon.com, Inc., so why wouldn’t you be able to order pot if it becomes federally legal in America?

While the company hasn’t said as much, it’s not a stretch to read into Amazon’s statement that it’s looking to be a player in the marijuana delivery business.

There are many people in the U.S. who would like their marijuana to be delivered, and Amazon.com, Inc. could play a major role in that aspect of the market.

Here’s what the support from Amazon means for the future of U.S. marijuana legalization.

Consider that momentum has been building behind American pot legalization for years.

Between popular support (see any recent poll regarding marijuana legalization in the U.S.) and political support (legalization has never had this much vocal support from elected officials in modern U.S. history) growing, there’s a lot of potential for the U.S. to see real progress on pot legalization in the next few years.

But Amazon.com, Inc. is a first: a major (arguably the most major) U.S.-based company coming out, in no uncertain terms, in support of marijuana legalization.

So now we have social, political, and economic forces pushing for pot legalization.

In other words, other than some die-hard anti-drug crusaders and some elements of law enforcement, there’s little real opposition to U.S. marijuana legalization.

That means, as I’ve said for years, it’s only a matter of time before pot legalization comes to America at the federal level.

Analyst Take

A globe-spanning, trillion-dollar company like Amazon, with all its political and economic clout, can have a massive impact on the marijuana legalization debate.

Now, we don’t know how emphatic Amazon.com, Inc.’s support of pot legalization will continue to be, but if the company chooses to fight for marijuana legalization, that could rapidly accelerate the legalization timeline.

And as I mentioned earlier, Amazon’s support for pot legalization could, in turn, precede the company’s entry into the market.

What’s more, it appears that Amazon.com, Inc.’s recent public statement alone was enough to influence the marijuana market at least somewhat, as evidenced by the growth of Tilray stock.