Why Investors Were Fired Up About Tilray Stock Today
Key Points
New research suggests that legalized pot can supplant potentially harmful opioids.
This should bolster the case for de facto legalizing the drug.
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As a whole, the U.S. stock market wanted to partake of Tilray Brands (NASDAQ: TLRY) on Wednesday. The Canadian cannabis company's shares enjoyed a 5% lift on the day, although this was due to external news rather than any proprietary development. With that gain, Tilray easily beat the S&P 500 index, which rose by a relatively light 0.4% that day.
A possible alternative
The stock prices of marijuana companies like Tilray tend to move when there are positive results from medical testing related to the drug or some kind of move toward de facto legalization in this country.
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On Wednesday, a news item in the former category provided support for the treatment of weed as a medically useful product. A team comprised of researchers from the universities of Georgia and Colorado found that states with lenient pot laws have been demonstrating "significant" reductions in the prescribing of opioids.
Although opioids are safe when used properly and carefully, many are also very addictive and thus have notable potential for abuse.
The researchers found, in a study analyzing millions of prescription claims from 2007 to 2020 for millions of Americans, that the rate of patients being prescribed opioids declined by 16% on average. Some states it did not identify reached 22%.
Legalization still the best way forward
The more that cannabis can be shown to be beneficial in certain types of treatment, the more justification politicians have for reforming federal law prohibiting it. And that's what's really going to turn around the fortunes of Tilray and its many struggling weed industry peers. The current patchy system of legalization in U.S. states is not conducive to the growth of the sector's companies.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool recommends Tilray Brands. The Motley Fool has a disclosure policy.
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