The Cannabis sector took a step up yesterday as the House of Representatives announced they will be considering a bill next week to decriminalise marijuana.

The sector looks set to continue today as Tilray Brands (TLRY) stock is up 17% in premarket trading, while Sundial Growers (SNDL) gained 14%, Canopy Growth (CGC) 12%, Cronos Group (CRON) 7% and Aurora Cannabis (ACB) is up 13%.

The House bill, called the Marijuana Opportunity Reinvestment and Expungement Act, or MORE Act, would remove marijuana from the list of scheduled substances. It would also seek to establish a process to expunge prior cannabis convictions.

Tilray Brands

Tilray is currently at $8 in pre-market. This is one of the most popular names in the cannabis sector and reached a high of $67 during the February 2021 weed mania. Tilray is also one of the largest by market cap, sitting at $3.35B.

What reward does Tilray offer? As is is one of the largest companies, TLRY is a good choice for a swing trade as the volatility will be lower.

Tilray formed a strategic alliance with HEXO in an odd move to help keep a top Canadian cannabis competitor alive. TLRY ended up with the right to own 37% of HEXO on full conversion of the convertible debt. The company is working with HEXO on efficiency measures of up to C$50 million in production savings within two years shared equally by both companies.

Canopy Growth Corp

Canopy Growth Corp, or CGC, also has a similar market cap to TLRY. CGC has a 36% insider ownership and has 17% of its shares sold short. This number could help fuel a move up as shorts cover their position after this latest news.

Canopy has several times been traded above $40 for periods of time. However, the stock has been in a downtrend for many months and now sits under $10.

What next?

Much depends on the outcome of next week. In the run up to this, the sector and the above names will continue to see high volume as the attention turns to them.

Assuming the bill passes (as it did the last time it came up for a vote, in December 2020, by a vote of 228 to 164), it will move to the Senate for consideration. Last time, this was what kicked off the sector and big moves were seen.

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