Why Canadian Marijuana Stocks Popped Today

Several developments pushed north-of-our-border weed titles higher on the day.

Investors were uncharacteristically high on Canadian marijuana stocks as the stock market surmounted the hump of Hump Day. Many of the country’s weed companies did well during the trading session.

These included bellwether Canopy Growth (CGC 30.42%), which saw a more than 30% rise in its price on news that one of its former executives had been tapped to head an industry lobbying group. Other north-of-our-border cannabis titles catching a buzz were Tilray Brands (TLRY 18.26%), with an 18% lift, SNDL (SNDL 22.55%), advancing by more than 22%%, and Cronos Group (CRON 8.68%), bringing up the rear with a close-to-9% gain.

Leading the charge

Canopy Growth’s news was the only company-specific development driving those prices higher.

The executive in question is Paul McCarthy, who has been appointed president of weed lobbying organization the Cannabis Council of Canada. McCarthy is a seasoned veteran of the industry, having worked for Canopy Growth for over three years in a series of managerial positions. The final one of his positions was as the marijuana company’s head of corporate policy.

Having one of its former executives leading the lobbying effort of the pot business is sure to benefit Canopy Growth’s operations specifically, and more broadly, the conditions for selling weed in a challenging market for all growers, processors, and retailers in the sector. After all, prior to his Canopy Growth stint, McCarthy served in government roles at its Infrastructure Canada and Border Services agencies.

Another development in the Canadian market is the potential elimination of a competitor. The country’s top producer of edibles, Indiva (NDVA.F 14.58%), is apparently teetering. The company announced that it has begun an “evaluation of potential strategic alternatives intended to maximize shareholder value.”

This is typically taken to mean that a struggling company is making some effort to sell itself. Indiva said that it has hired an advisory firm to assist in the process and is considering measures such as a merger, reorganization, or “other similar transactions.” It might, then, offer a discount-priced way for one of its peers to become king of the edibles segment.

Other problems need to be addressed, however

While these developments are mid- to long-term positives, the entire Canadian pot industry still faces numerous daunting challenges. Persistent black-market competition is a concern, and pot companies have struggled with oversupply.

Compounding that problem, the U.S. doesn’t seem to be in any hurry to relax its federal laws. A wide-open American market would immediately and strongly benefit Canadian exporters.

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool recommends SNDL and Tilray Brands. The Motley Fool has a disclosure policy.

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