Most cannabis-related stocks posted double-digit gains Thursday, with all the gains coming after President Joe Biden announced a blanket pardon for people who had been convicted of simple marijuana possession since the 1970s. There are currently no people incarcerated for violating the federal possession law.
There are, however, thousands of Americans who were convicted of violating federal law who will now have their record of that crime erased. Biden’s pardon does not extend to people who have been convicted of violating state marijuana possession laws.
Marijuana stocks jumped Thursday, not so much on Biden’s pardon but on his direction to the Department of Justice to review the federal legislation that labels cannabis as a dangerous drug under the Controlled Substances Act, a classification that includes heroin, cocaine and LSD, among other substances. But not fentanyl, easily the most addictive, dangerous, and lethal drug available. Synthetic opioids, such as fentanyl, were responsible for more than 71,000 deaths last year, according to Centers for Disease Control and Prevention data.
The cannabis industry has been waiting for years for the United States to remove marijuana from that category. Once pot sheds its dangerous drug label, federal criminal penalties based on that label will no longer be enforceable.
Marijuana possession remains illegal in 15 states: Alabama, Georgia, Idaho, Indiana, Iowa, Kansas, Kentucky, Mississippi, Nebraska, North Carolina, South Carolina, Tennessee, Texas, Wisconsin and Wyoming. Cannabis is fully legal in 19 states and legal to some degree for medical purposes in the rest.
According to FBI data, almost a third of all arrests for drug possession (both federal and state) involved possession of marijuana. An ACLU study of marijuana arrests showed that Black Americans are three times more likely than whites to be arrested for marijuana possession.
While Biden’s order to review marijuana’s listing as a dangerous drug is good news for the cannabis industry, it will not solve all the industry’s problems. Many states face oversupply issues that force prices and tax revenues down. Competition with illegal sellers who do not pay state taxes also undermines tax collections.
Following Thursday’s sharp price increases, Friday’s premarket action was more subdued. Tilray Brands Inc. (NASDAQ: TLRY), which reported quarterly results in the morning, traded down about 2.3%, after gaining nearly 31% on Thursday.
Canopy Growth Corp. (NASDAQ: CGC), which added 22% Thursday, traded down 3.2% Friday morning.
Cronos Group Inc. (NASDAQ: CRON) gained 13.5% and traded up about 0.3% in the morning.
SNDL Inc. (NASDAQ: SNDL), formerly known as Sundial, added 23.5% on Thursday and was down about 5% in Friday’s premarket.
Aurora Cannabis Inc. (NASDAQ: ACB) traded down almost 0.8%, after adding 7.3% on Thursday.
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