Once down in the weeds, cash-strapped pot producers raise billions in market rally
A political shift in the United States has unlocked an estimated US$1.38 billion jackpot for struggling pot producers who have cashed in on a surge in their shares since President Joe Biden's election in November.
Cannabis producers have issued stock worth this amount in the first five weeks of 2021, investment firm Viridian Capital Advisors estimates, as prices have risen on a promise of federal decriminalisation of marijuana and a host of other reforms by the incoming Biden administration.
Canadian pot companies have been the largest beneficiaries of the rally in shares, owing to the fact that they have been allowed to list on US exchanges, while US companies that harvest or sell marijuana within the country are forbidden from doing so.
Retail investors have also piled into the pot sector this week, with Tilray, Aphria and Sundial Growers emerging as the new favourites of Reddit's popular WallStreetBets forum that was behind recent rallies in some shorted stocks.
In a vote of confidence in the sector, a single unnamed institutional investor this week bought US$100 million worth of stock in US-based pot producer Green Thumbs Industries Inc's initial public offering, according to a company filing.
Calgary, Alberta-based Sundial, a medical cannabis producer, has issued over a billion new shares since September.
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