It was a good day for Smart sheets (NASDAQ:CLVR) for several reasons, including an upcoming vote on marijuana legalization and a strong earnings report. Indeed, cannabis stocks are soaring today as the industry awaits a vote from Capitol Hill on a bill for the national legalization of marijuana. Additionally, the Florida-based company recently reported strong fourth quarter 2021 results, pushing CLVR shares higher yesterday. Today, it is still in the green.
What’s going on with CLVR stock
After rising 13% yesterday after the market closed, CLVR stock is not slowing down. As of this writing, it is up over 26% for the day.
To understand why, let’s first dive into yesterday’s earnings report. Yesterday’s call brought not only impressive overall gains figures but also the reaffirmation of Clever Leaves’ 2022 outlook. During the quarter, revenues reached $4.2 million, a gain of approximately 25%. Cannabinoid revenue increased 11% to $1.1 million, while for the non-cannabinoid category, revenue increased 31% to $3.1 million.
Reports indicate that 2021 has seen non-cannabinoid revenue growth driven by increased demand from distributors and combined with the easing of some restrictive Covid-19 policies. The increase in cannabinoid sales was due to the expansion of sales. Despite a net loss of $24 million, the overall earnings report is good news for investors.
Additionally, the stock is clearly benefiting from the momentum spurred by the impending vote to legalize marijuana. Large-cap and small-cap cannabis stocks are in the green as investor enthusiasm rises.
why is it important
The entire sector is eagerly awaiting Monday’s verdict on the legalization bill, known as the MORE law. The momentum we saw from cannabis stocks today indicates that companies are not expecting bad news.
There is certainly cause for optimism. Yesterday, the Cannabidiol and Marihuana Research Expansion Act received a unanimous vote of the senate. This bill is only intended to expand cannabis research, but it is very positive that it has not received any opposition.
The Marijuana Opportunity, Reinvestment and Expungement, or MORE Act, was originally proposed by Jerry Nadler (D-NY). This is not the first time it has been put to a vote. At the end of 2020, the bill received a House vote 228 to 164. The Republican-controlled Senate prevented him from advancing further. Now that the other party holds the majority of seats in the Senate, the cannabis companies have reason to believe there could be a different outcome.
What this means
Passing the MORE Act would mean removing marijuana from the list of controlled substances. This type of change would eliminate many of the restrictions faced by companies that produce or distribute cannabis in the United States.
The data indicates that sales of legal and recreational cannabis in the United States have been constantly growing and should not stop in the years to come. If the bill passes, it will propel CLVR stock out of the penny category. The company’s recent earnings indicate that it is good play for cannabis stocks. Investors would be wise to double down before the passage of the MORE Act sends it skyrocketing.
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As of the date of publication, Samuel O’Brient had no position (directly or indirectly) in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com Publication guidelines.