Marijuana stocks are moving higher on Tuesday after Marijuana Moment reported on a new initiative in Congress that could give marijuana demand a lift. According to the weed-news source, the House Armed Services Subcommittee on Military Personnel is recommending the U.S. military cease testing recruits for marijuana use.

Weed stocks lit up in response. As of 2 p.m., Aurora Cannabis (NASDAQ: ACB) shares were up 6%, Tilray Brands (NASDAQ: TLRY) was up 6.8%, and SNDL Inc. (NASDAQ: SNDL) was doing best of all, scoring a 10.2% gain.

Uncle Sam to end cannabis testing?

As Marijuana Moment reported, the subcommittee is drafting language for Congress’ 2025 National Defense Authorization Act (NDAA), which would make this ban on marijuana testing federal law. If passed, it would represent yet another step in a whole series of steps approaching full-scale legalization of marijuana at the federal level.

These steps include a SAFER law on marijuana banking reform, which enjoys widespread support from both major political parties; a less popular Marijuana Opportunity Reinvestment and Expungement (MORE) Act that would legalize the drug entirely; and last month’s Drug Enforcement Agency recommendation that marijuana be reclassified as a low-risk Schedule III controlled substance.

It’s worth noting that the subcommittee’s desire to end marijuana testing among military recruits doesn’t mean the full committee will include this language in the 2025 NDAA or that Congress will vote to approve the language.

What it might mean for marijuana stocks

But what if the language does make it into law? Banning marijuana testing of military recruits could help ease the military’s well-known problems hitting recruitment goals, at the same time as it removes an obstacle to wider marijuana use — presumably boosting marijuana sales and use. That being said, the overall effect on marijuana sales would probably be negligible.

Investors in marijuana stocks are reacting to what looks like good news, but I think they are marijuana investors are overreacting today.

Should you invest $1,000 in SNDL right now?

Before you buy stock in SNDL, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and SNDL wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $553,880!*

Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.

See the 10 stocks »

*Stock Advisor returns as of May 13, 2024

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

Why Aurora Cannabis, Tilray Brands, and SNDL Inc. Stocks Lit Up on Tuesday was originally published by The Motley Fool

Source link