Cannabis stocks shot to record gains Thursday after President Joe Biden formally sought to review how marijuana is classified under federal law, a change that pot companies in the U.S. and Canada have long sought.
The moves buoyed the cannabis sector after steep losses in 2022 on lack of movement from the federal government on cannabis legalization, even as more states launch adult use and medical programs for cannabis. Cannabis is currently regulated by the Drug Enforcement Administration and listed as a Schedule 1 drug, in the same federal bucket as heroin, but Biden publicly asked his attorney general and secretary of the Health and Human Services Department to begin the process toward changing that while announcing other pro-cannabis moves Thursday.
Exchange-traded funds focused on the marijuana industry reflected record gains after stocks reacted to the news. The AdvisorShares Pure US Cannabis ETF
rose 34%; the ETF, which focuses on the U.S. pot industry, had never previously gained more than 9.5% in a single session, according to FactSet. The ETFMG Alternative Harvest ETF
increased 19.6%, topping its previous record for daily percentage gain of 14.9%.
“This is huge news — the biggest step under the Biden administration so far on federal cannabis reform,” U.S. cannabis company Cresco Labs
tweeted as its shares vaulted 24.4%, the stock’s best day since late 2018.
Curaleaf Holdings Inc.
the largest U.S. multistate operator, or MSO, jumped 33.1%, while Trulieve Cannabis Corp.
moved up by 36%, both record daily moves. Canadian companies also saw big gains: Tilray Brands Inc.
rallied 30.9%, Canopy Growth Corp.
rose 22.2%, Cronos Group Inc.
rose 13.5% and Aurora Cannabis Inc.
While the businesses of U.S. companies have been growing revenue as more states come online, their stock prices have weakened in 2022 amid dim prospects for U.S. legalization. While the SAFE Banking Act to open up financial services to cannabis companies has passed the U.S. House several times, it’s never come to a vote in the Senate.
President Joe Biden on Thursday said he would pardon all prior federal offenses of simple possession of marijuana. Although presidential pardons restore various rights lost as a result of the pardoned offense, it does not erase or expunge the conviction records.
“There are thousands of people who have prior federal convictions for marijuana possession, who may be denied employment, housing, or educational opportunities as a result,” Biden said in a statement.
Meanwhile, states such as New York have moved to award cannabis licenses to people who have been imprisoned for cannabis offenses as a way to correct the impact of the Drug War on people of color.
Also Read: New York’s new cannabis chief vows that half of legal licenses will go to social justice efforts