Marijuana stocks and sector-related ETF rallied Tuesday, led by Tilray (NasdaqGS: TLRY), after the Drug Enforcement Administration gave the green light for the Canadian grower to import cannabis into the U.S. for medical research.
The ETFMG Alternative Harvest ETF (NYSEArca: MJ), first U.S.-listed ETF to target the cannabis and marijuana industry, increased 7.4% Tuesday.
Tilray became the first Canadian company to import cannabis to the U.S. as the company works with the University of California San Diego’s Center for Medicinal Cannabis Research on clinical trial to test whether the drug can treat essential tremor, a neurological disorder that causes uncontrollable shaking, Bloomberg reports.
“I think it’s really exciting that we’re targeting this indication that no one else has thought of targeting,” Catherine Jacobson, director of clinical research at Tilray, told Bloomberg. “It’s showing that these cannabinoids may be effective at treating a number of diseases that people hadn’t thought of before.”
TLRY Shares Surged on DEA Approval
TLRY shares surged 25.6% on the DEA’s approval. Tilray makes up 9.1% of MJ’s underlying portfolio.
The news signals yet “another encouraging sign of improved government support for cannabis research,” Cowen analyst Vivien Azer said in a note, Bloomberg reports. The increased medical applications “add another domino to future legalization in the U.S.”
Tilray may also be in a better competitive position against its Canadian peer Canopy Growth Corp., which has 39 U.S. patents and 15 clinical trials, Azer added.
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Tilray is also part of four other clinical trials to determine the benefits of medical cannabis in treating post-traumatic stress disorder, chemotherapy-induced nausea, the side effects of glioblastoma, an aggressive type of brain cancer, and Dravet syndrome, a rare form of pediatric epilepsy.
Cannabis remains illegal under U.S. federal law. However, several states, including California, Oregon and Washington, have legalized the drug for recreational adult use. The cannabis industry has been gaining momentum after Canada voted to legalize marijuana for adult consumption on October 17.
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