Cannabis stocks rallied this week after U.S. President Joe Biden pardoned all people formerly convicted of federal marijuana possession.
The announcement surprised the market, but it’s not the first time the President stated his views on cannabis.
Biden also instructed the Attorney General’s office and the Department of Health and Human Services to review how cannabis is scheduled under federal law.
The federal government now classifies cannabis as a Schedule 1 narcotic, along with drugs like LSD and heroin.
Biden urged governors to issue similar pardons for state cases relating to civil possession of the drug and stated:
“There are thousands of people with prior federal convictions for marijuana possession which may be denied employment, housing, or educational opportunities as a result. My action will help relieve the collateral consequences arising from these convictions,”
The announcement gives renewed strength to the prospect that cannabis reform may come sooner rather than later.
Sector heavyweights attracted significant buying for stocks, including; Curaleaf (CA:CURA), which rose +35.4%; Green Thumb Industries (CA:GTII), which moved +31.9% higher and Tilray (US:TLRY), which finished the day +30.9% higher.
The best stock performer by a long shot was WM Technology (US:MAPS), with a stellar gain of +64.3% by the close of US trading.
Investors that hold Cannabis sector ETFs were rewarded heavily with some of the big funds gapping higher, including:
- (US: MSOS) AdvisorShares Pure US Cannabis ETF +34%
- (US:MJ) ETFMG Alternative Harvest ETF +19.5%
- (US:YOLO) AdvisorShares Pure US Cannabis ETF +26.3%
- (US:POTX) Global X Cannabis ETF +10.4%
- (US:CNBS) Amplify Seymour Cannabis ETF +20.5%
Jaret Seiberg from Cowen Research saw the move as ‘symbolically important’ but urged caution in setting expectations as scheduling changes would take years, longer if there’s prolonged litigation.
Michael Lavery from Piper Sandler & Co recognized that regulatory and market headwinds have been a drag for Cannabis stock growth but believe Biden’s request could be a significant catalyst for the industry.
He believes existing US operators are the best-positioned companies as they have a headstart with a competitive advantage. Oversupply plagues the market though, he noted.
This article originally appeared on Fintel
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