Why Aurora Cannabis, Tilray Brands, and SNDL Inc. Stocks Lit Up on Tuesday

Marijuana stocks are moving higher on Tuesday after Marijuana Moment reported on a new initiative in Congress that could give marijuana demand a lift. According to the weed-news source, the House Armed Services Subcommittee on Military Personnel is recommending the U.S. military cease testing recruits for marijuana use.

Weed stocks lit up in response. As of 2 p.m., Aurora Cannabis (ACB -0.92%) shares were up 6%, Tilray Brands (TLRY -3.38%) was up 6.8%, and SNDL Inc. (SNDL -3.24%) was doing best of all, scoring a 10.2% gain.

Uncle Sam to end cannabis testing?

As Marijuana Moment reported, the subcommittee is drafting language for Congress' 2025 National Defense Authorization Act (NDAA), which would make this ban on marijuana testing federal law. If passed, it would represent yet another step in a whole series of steps approaching full-scale legalization of marijuana at the federal level.

These steps include a SAFER law on marijuana banking reform, which enjoys widespread support from both major political parties; a less popular Marijuana Opportunity Reinvestment and Expungement (MORE) Act that would legalize the drug entirely; and last month's Drug Enforcement Agency recommendation that marijuana be reclassified as a low-risk Schedule III controlled substance.

It's worth noting that the subcommittee's desire to end marijuana testing among military recruits doesn't mean the full committee will include this language in the 2025 NDAA or that Congress will vote to approve the language.

What it might mean for marijuana stocks

But what if the language does make it into law? Banning marijuana testing of military recruits could help ease the military's well-known problems hitting recruitment goals, at the same time as it removes an obstacle to wider marijuana use -- presumably boosting marijuana sales and use. That being said, the overall effect on marijuana sales would probably be negligible.

Investors in marijuana stocks are reacting to what looks like good news, but I think they are marijuana investors are overreacting today.