Cannabis stocks get high on Reddit-fueled rally

The Reddit crowd has set its sights on something new: pot stocks.

Shares in cannabis companies soared on Wednesday, fueled by positive posts on WallStreetBets, the same Reddit message board responsible for the recent trading frenzy involving GameStop and AMC.

In one post that received around 10,000 likes in about 12 hours, one user points to shares of Tilray and Aphria, telling other Reddit users that those stocks have more room to rise.

Shares of Tilray jumped 23 percent to highs not seen in a year and a half.

Aphria shares jumped to a record high in U.S.-listed trading on the Nasdaq.

But it's more than just Reddit-mania driving these stocks higher. Investors have been pushing up the sector for months, betting the Biden administration will decriminalize marijuana at the federal level.

In addition, some Democrats have promised to make changes that could help give cannabis companies access to more traditional methods of banking and open the sector to new, institutional investors.

There are, however, skeptics.

Some analysts think prices are becoming too high, especially for Tilray, Aphria and Canopy Growth - three Canadian companies that are unlikely to see much upside from any federal legalization of marijuana in the U.S.

And even with all the hype, it's still a money-losing business.

Canopy Growth, the top pot producer, this week still posted a quarterly loss.

Nevertheless, the Reddit crowd thinks it has a winner in cannabis stocks.

But the rise and fall of GameStop could serve as a cautionary tale.

During the frenzy, that stock surged to a record high of $483....on Wednesday, it was back down to the $50 area.