Cannabis stocks are marching higher on news that the administration of U.S. President Joe Biden is moving to reclassify the recreational drug and ease federal restrictions imposed on it.
Specifically, the Biden administration is proposing to reclassify cannabis (marijuana) as a Schedule III substance.
For more than 50 years, cannabis has been labeled as a Schedule I substance in America, the same category as drugs such as methamphetamine and heroin.
Drugs in the Schedule 1 category are defined as having “no currently accepted medical use and a high potential for abuse.”
A move to Schedule III would place cannabis alongside less harmful drugs and prescription medications such as Tylenol with codeine and anabolic steroids.
Schedule III drugs are defined as having “…a moderate to low potential for physical and psychological dependence.”
News of the potential reclassification is being cheered by investors who are bidding up cannabis stocks.
The stock of Canopy Growth (WEED) rose 80% in Toronto trading on news of the U.S. reclassification, finishing trading on April 30 at $20.45 per share.
At the same time, shares of Tilray Brands (TLRY) gained 42% to close at $3.42.
The AdvisorShares Pure US Cannabis ETF (MSOS) increased 25% on news of the U.S. reclassification. Other cannabis exchange-traded funds (ETFs) also rose 20% or more.
Investors have long viewed decriminalization of cannabis at the federal level in the U.S. as key to the future growth of the recreational drug.
