Why Aurora Cannabis Stock Just Rocketed Higher
Key Points
The Washington Post reports that President Trump will reschedule marijuana as a Schedule III drug.
Marijuana is already legal in Canada, but Aurora Cannabis can't seem to make a profit off of it.
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Aurora Cannabis (NASDAQ: ACB) stock leapt 14.5% "higher" (get it? Marijuana? High?) through 11:55 a.m. ET Friday on some positive marijuana news out of the White House.
As The Washington Post reports, President Trump wants to legalize marijuana (sort of), and marijuana investors are overjoyed at the prospect.
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Image source: Getty Images.
President Trump's Christmas gift to marijuana investors
The Post cites six separate sources confirming that Trump will issue an executive order instructing the Justice Department to reclassify marijuana as a Schedule III drug (i.e., no longer Schedule I), and says this could happen as early as January. For weed aficionados who don't want to wait even that long, however, CNBC says the President could sign his order as early as Monday.
What would this mean for investors in Aurora Cannabis?
Well, rescheduling wouldn't legalize marijuana per se -- but it would make it a whole lot easier to do business in marijuana. A move from Schedules I to III would basically turn cannabis into a drug similar to "common prescription painkillers and other drugs" such as Tylenol with codeine, and dissociate weed from harder drugs such as heroin.
Banks would feel more comfortable extending loans to and taking deposits from marijuana businesses. They'd be able to deduct more expenses from their income taxes. All of this would tend to increase (legal) demand for the marijuana that Aurora Cannabis produces.
Is Aurora Cannabis stock a buy?
Investors need to be aware, though, that simply rescheduling marijuana may not immediately turn Aurora Cannabis into a profitable stock. Marijuana has been legal in Aurora's home market of Canada since 2018, but the company still loses money most years.
Marijuana investors should enjoy the momentum behind their stock today. Just... don't expect it to continue without some solid profits to support it.
Should you invest $1,000 in Aurora Cannabis right now?
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Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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