Tilray and Sundial embark on 2-day rally after Amazon says it stands behind federal marijuana legalization

• Tilray and Sundial are rallying for a second day after Amazon endorsed a federal marijuana legalization bill earlier this week.
• The two Canadian cannabis stocks are beloved by retail traders on Reddit investing threads.
• Tilray and Sundial were part of the meme stock rally earlier this year amid the GameStop frenzy.

Canadian cannabis companies Tilray and Sundial are on a two-day rally after Amazon announced it would support a federal bill to legalize marijuana - and retail traders are celebrating.

Shares of Tilray jumped 12% to $19 Wednesday and rose 9% in early morning trading Thursday. Last month, Tilray completed its acquisition of Aphria, making the combined business the largest cannabis company in the world by revenue.

As for Sundial, the stock closed 13% higher at $1.13 Wednesday and jumped another 17% Thursday morning.

Earlier this week, Amazon said its public policy team will back the Marijuana Opportunity Reinvestment and Expungement Act of 2021, also called the MORE act, which would end criminal penalties for anyone who sells cannabis in states where its legal, decriminalize the use of cannabis in the US, and allow states to establish commercial marijuana sales.

Retail traders bullish on cannabis stocks have been hyping up the companies on Reddit's top investing threads, and the sentiment is very positive. According to HypeEquity data, they were two of the top talked-about companies Wednesday among a group of 18 meme stocks, including AMC, Bed Bath & Beyond, and GameStop.

The stocks have seen a "significant pickup" of retail flows in recent days - the most since the meme stock frenzy began earlier this year, Vanda Research said in a recent report, noting the MORE Act as a catalyst for the uptick. The bill, which passed the House of Representatives in December, has "low chances" of being passed in the Senate, Vanda Research analysts said, but "increasing media coverage is likely to attract the attention of the average retail investor."

In January, an army of retail traders poured into GameStop, starting a new trend of meme stocks. Amid a broad rally in meme stocks, Tilray and Sundial also surged but declined in the following months. Meme stocks have picked up again in recent weeks, though, led by an unprecedented rally in movie theater chain AMC Entertainment.