What happened

Shares of some Canadian cannabis companies jumped Monday morning, before paring those gains. Shares of Aphria (NASDAQ:APHA), OrganiGram Holdings (NASDAQ:OGI), and Aurora Cannabis (NYSE:ACB) all rose between 6% and 8% early in today's session. Those gains faded some, and as of 2 p.m. EDT, Aphria traded up about 1%, Organigram was up 3.2%, and Aurora was up 3.4%.

So what

The biggest recent news among these Canadian growers was the overwhelming shareholder support the proposed merger between Aphria and Tilray (NASDAQ:TLRY) received. Approval of the previously announced combination required a two-thirds majority by voting Aphria shareholders. Late last week, the company revealed that more than 99% of voters approved the plan. Other news in the marijuana sector from last week was OrganiGram Holdings releasing its fiscal 2021 second-quarter financial results.

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Now what

The most recent quarterly financial results have been a bit of a mixed bag in the cannabis sector. In its report last week, Aphria said it experienced its eighth straight quarter of positive adjusted EBITDA. But much of the focus was on declining revenue from the previous sequential quarter. Net revenue dropped 4.3% quarter over quarter, and net cannabis revenue dropped nearly 24% in the same comparison. With a post-pandemic recovery presumably under way, that's not a trend investors wanted to see. 

OrganiGram similarly reported a sharp drop in revenue compared to its previous-year period. Management noted lower average selling prices to help explain the 37% drop in year-over-year net revenue. Aurora, which is in the midst of attempting a business turnaround, had better relative results compared to its previous-year period, aided from strength in international medical marijuana sales and product launches in vapes, edibles, and concentrates.

Future success from the Canadian companies is going to depend somewhat on international business. If the U.S. market opens up with federal legalization, it will be a boon for many Canadian companies. In the meantime, the newly combined Aphria and Tilray business is expanding overseas, and preparing for an open U.S. market. Tilray has been expanding into Europe, having made several recent announcements about new business in the U.K., Spain, and Portugal. Aphria acquired Georgia-based craft brewer SweetWater Brewing late last year in part to add distribution infrastructure in the U.S. 

Aphria CEO Irwin Simon told CNBC in a February interview he hopes to see fully legal cannabis in the U.S. within two to three years. Simon will also lead the newly combined company that will use the Tilray name. The CEO said he thinks legalization is likely to happen sooner in Germany, Portugal, and other countries, reinforcing the moves Tilray has been making in the region.

Today's volatility in the stocks is something investors will have to remain accustomed to as they speculate over political outcomes and the future direction of the fledgling industry.