Aurora Cannabis, Canopy Growth, Curaleaf stocks spiked: here’s why

It is a good Monday for Cannabis stocks. Canopy Growth (CGC), Curaleaf (CURLF),  and Aurora Cannabis (ACB) stock prices surged by more than 10% in the pre-market session. The same is true with Tilray Brands, which I wrote about here while the Pure US Cannabis ETF (MSOS) jumped by 15%.

Canopy Growth vs Curaleaf vs Aurora Cannabis

The main reason for the surge is that the Biden Administration is matching towards a reclassification of marijuana as a less dangerous drug. This classification is being championed by the Drug Enforcement Administration (DEA). It aims to move cannabis from Schedule 1 to Schedule 3.

Such reclassification could have a major impact in the cannabis industry in the US at a time when the country has failed to pass unified cannabis regulations. 

The challenge, according to the WSJ, is that some DEA officials have opposed the rescheduling, arguing its medical benefits have been unproven. This evidence is important and required by US law.

Therefore, the surge of CGC, CURLF, and ACB stock prices is a sign that the market expects that the rescheduling will happen.

The caveat is that the jumps of cannabis stocks tends to be temporary, which explains why most of them have tumbled this year. Aurora Cannabis stock is down by more than 33% this year while Canopy Growth has dropped by almost 40% this year. Only Curaleaf Holdings and a few others have turned positive this year.

The other challenge for most cannabis stocks is that they are still losing money and are not growing as they used to before. Canopy Growth’s revenue stood at $48.6 million in the last quarter from $46.7 million in Q3. It has also lost over $15 million in the last five quarters.

Aurora Cannabis is also not doing well. Its revenue in the last quarter came in at $59.3 million, down from $62.7 million in the same quarter in 2022. The company has lost over $150 million in the past five quarters.

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