Why SNDL, Aurora Cannabis, and Tilray Stocks Popped Today

What happened

Investors in marijuana stocks such as SNDL (SNDL 2.36%), Aurora Cannabis (ACB 2.29%), and Tilray (TLRY 1.50%), are having a good day Thursday — and not just because the Federal Reserve decided to only raise interest rates 0.25% yesterday. On top of that good news, you see, there’s a new report by the American Medical Association (AMA) that argues medical marijuana may be at least part of the solution to solving America’s opioid crisis.

And hearing that, investors are bidding up shares of SNDL by 4.7% today (through 11:10 a.m. ET), and delivering gains of 5.5% apiece to both Aurora Cannabis and Tilray investors.

So what

So what is it about the AMA report that may be getting investors excited?

As Marijuana Moment reports, the AMA surveyed 8,165 patients currently using opioid drugs to treat chronic pain, who enrolled in a program to add cannabis to their pain treatment program. On average, the study showed that such patients were able to cut their consumption of potentially addictive opioids by anywhere from 47% to 51% after taking cannabis for eight months. (Note that this is now the second such study that’s been backed by the AMA in less than a month, adding credibility to the conclusions.)

The effect was not immediate. Perhaps the most interesting data from the AMA study (interesting to marijuana investors at least), was the fact that patients seemed to need to get used to using marijuana instead of opioids for the full effects to manifest. Patients who used cannabis for less than 30 days were only able to cut their opioid consumption by between 4% and 14%.

Conclusion: Short-term use of cannabis may not dramatically cut opioid dependence, but long-term use surely does. And that’s good news for any investor who likes the idea of recurring revenue streams.

Now what

Investors today seem to be taking the AMA report as another argument in favor of legalizing marijuana — at least for medicinal purposes. Then again, marijuana is already legal for these purposes in 42 U.S. states and territories (versus 24 states and territories where recreational use is permitted). So there’s also a question about how much expanded use of marijuana for pain management will really grow the market, absent actual federal-level legalization of marijuana for recreational use.

On balance, therefore, no matter how good today’s news is, I’m still not certain it’s going to move the needle much for marijuana investors. Full-scale, federal legalization is still probably the sine qua non for growing this market significantly. And unless federal legalization happens sooner, investors are probably still another few years away from any of the big marijuana stocks earning any profits.