As the marijuana industry evolves, investors are going to start looking for ways to make money from it. And Tilray stock is doing just that.
Tilray, a Canadian company that is one of the largest cannabis companies in the world, saw a major spike on Wednesday. The company announced that it is partnering with Amazon.com to sell their products, and this move could be a huge boost for the cannabis industry as a whole.
The news was of course good for Tilray stock after Amazon.com recently endorsed the legalization of cannabis in the United States. This action comes as a big surprise considering that Amazon.com is one of the most respected companies in the world. They have been around for as long as humans have been storing their items in boxes, and now they are lending their support to a cause that, let’s be honest, most of us have been waiting a long time to see happen.
TLRY stock rises and the future looks brighter for marijuana stocks
This has been a year of change for many sectors. Indeed, COVID-19 has forced us to rethink entire sectors of our economy. But the area that has seen the most change is the marijuana industry. As a result, the Bank’s shares have become more volatile and unpredictable. But in 2021, we see some serious momentum behind marijuana stocks, most notably Tilray Inc (NASDAQ:TLRY). Tilray’s shares have risen sharply recently relative to the company’s other major stocks, as shown in the chart below. Graph courtesy of StockCharts.com There are several reasons for the rise in TLRY stock. The first reason is specific to Tilray Inc: its recent merger with Aurora Cannabis Inc (NASDAQ:ACB). With this partnership, Tilray could become one of the largest marijuana companies in the world by market capitalization, if not the largest. Canopy Growth Corp (NYSE:CGC) currently has an edge over Tilray Inc. as the largest market cap holder in the marijuana industry, but that advantage is shrinking. Tilray currently has a market value of approximately $8.4 billion. Canopy Growth Corp has a market capitalization of about $9.3 billion, which closes the gap. This puts it well ahead of its second challenger, Cronos Group Inc. (NASDAQ:CRON), which has a market value of approximately $3.2 billion. So the Tilray/Aurora deal has paid off, bringing Tilray Inc, previously a lesser (or at least second-rate) player in the industry, into the spotlight. As recognition and status increased, more and more capital began to flow into the company. Many investors see Tilray stock as a big, promising player – perhaps even an industry leader in a few months or years – while others look forward to capitalizing on the favor of the Aurora merger. The second reason for the rise in TLRY stock is a recent announcement by a company in a completely different sector: Amazon.com, Inc. (NASDAQ:AMZN). You may be wondering what Amazon, the e-commerce giant, has to do with the marijuana industry. Not bad, actually. Amazon.com, Inc. has supported the legalization of marijuana on a federal level and has also stated that it will no longer test its employees for the presence of marijuana. And because we know this issue is bigger than Amazon, our public policy team will actively support the Marijuana Opportunity and Reinvestment and Relief Act of 2021 (MORE Act), federal legislation that would legalize marijuana on a federal level, eliminate criminal records and invest in affected communities, wrote Dave Clark, executive director of consumer affairs for Amazon.com, Inc. worldwide. (Source: Cannabis Stocks Rally After Amazon Endorses Legalization, MarketWatch, June 2, 2021). This is a very important matter. Amazon is one of the largest and most popular companies in the world. By explicitly supporting the legalization of marijuana in the United States, the company is implicitly signaling its intent to enter the marijuana supply market. That makes sense: You can already buy just about anything on Amazon.com, Inc. so why not order weed when it’s federally legalized in America? While the company hasn’t said anything about it yet, it’s not unreasonable to read into Amazon’s statement that it wants to become a player in the marijuana delivery industry. Many people in the U.S. would like to have marijuana delivered, and Amazon.com, Inc. can play an important role in this aspect of the market. Here’s what Amazon’s support means for the future of marijuana legalization in the United States. Remember, the push to legalize weed in America has been going on for years. Between growing popular support (see every recent poll on marijuana legalization in the U.S.) and political support (legalization has never received so much explicit support from elected officials in the modern history of the U.S.), there is great potential for the U.S. to see real progress on marijuana legalization in the coming years. But Amazon.com, Inc – is a first: a major (perhaps the largest) U.S. company that has made a clear commitment to the legalization of marijuana. So now we have social, political and economic forces advocating for the legalization of marijuana. In other words: With the exception of a few ardent anti-drug activists and some law enforcement officials, there is little real opposition to the legalization of marijuana in the United States. This means, as I’ve been saying for some time, that it’s only a matter of time before weed is legalized at the federal level in America.
A billion-dollar global company like Amazon, with all its political and economic clout, could have a major impact on the debate over marijuana legalization. At this time, we don’t know the extent to which Amazon.com, Inc. will continue to support marijuana legalization, but if the company decides to commit to marijuana legalization, it could quickly accelerate the timeline for legalization. And as I’ve said before, Amazon’s support for the legalization of marijuana could once again precede the company’s entry into that market. Moreover, it seems that the recent public announcement by Amazon.com, Inc. alone was enough to have at least some impact on the marijuana market, as evidenced by the rise in Tilray shares.After the Seattle-based internet giant Amazon.com announced it would start selling medical marijuana to its customers, Tilray stock jumped 10% in pre-market trading. The company, which is the largest grower of medical marijuana in the United States, is now worth about $2.7 billion. That’s a big jump from $1.8 billion on March 24, the day before Amazon started selling marijuana.. Read more about tilray stock forecast 2021 and let us know what you think.
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