Key points:
- Sundial Growers (SNDL) shares have risen 25.9% in a week.
- In addition, the stock appears to have recently bottomed.
- Read on to find out what could happen to SNDL stock in future.
The Sundial Growers Inc (NASDAQ: SNDL) share price has risen by 25.9% in the past week, driven by positive investor sentiment. Luckily for investors, their positive mood was rewarded on Thursday when the CLIMB Act or the Capital Lending and Investment for Marijuana Businesses Act, was introduced to Congress.
Also read: The Best Undervalued Stocks To Buy.
The bill seeks to make it easier for cannabis companies to access traditional funding sources and the capital markets despite cannabis remaining illegal at the Federal level. US cannabis companies have struggled to access traditional banking services amid delays in passing the MORE Act of 2020 that could have legalized marijuana on a Federal level.
Sundial Growers’ shares have fallen 38.4% in 2022 despite rallying higher in late March this year amid hopes that the federal legalization of marijuana in the United States was about to happen. Since then, investors have been waiting for progress on the MORE Act, but nothing significant has happened.
The cannabis company also completed the acquisition of Alcanna, the largest Canadian alcohol retailer by store count, in late March, which should have boosted its stock price, but did not as investors were focused on news regarding the legalization of marijuana in the United States.
Sundial Growers can now use Alcanna’s extensive alcohol distribution network to distribute its cannabis products alongside the original alcohol distribution business since marijuana is mainly consumed as a recreational drug like alcohol.
Meanwhile, the cannabis sector has suffered significantly in the recent past leading to the closure of some facilities and staff layoffs. Many see the CLIMB Act as a welcome relief to an industry that faces many headwinds.
The record-high inflation has hit cannabis companies as consumers refrain from buying non-essential products and services as essential expenses take a significant percentage of their paychecks.
Overall, Sundial Growers is one of the robust cannabis companies and might have just bottomed, as shown in the daily chart below. However, I wouldn’t buy the stock yet, since the cannabis industry still faces multiple challenges, chief among them being federal legalization.
*This is not investment advice. Always do your due diligence before making investment decisions.
The Sundial Growers stock price.
The Sundial Growers’ share price has risen 25.85% in the past week amid a broad recovery in cannabis stocks.
