Canadian cannabis stocks rose as much as 20% on news that Senate Democrats plan to
introduce legislation to decriminalize the recreational drug at the federal level in America.
The “Cannabis Administration and Opportunity Act” would remove cannabis from the list of
drugs covered by the Controlled Substances Act and could be introduced in the U.S. Senate as
early as next week.
The proposed legislation would still enable U.S. states to uphold or create prohibitions on the
production and distribution of cannabis.
Still, news of the cannabis legislation was enough to send stocks of Canadian producers
soaring. Tilray Brands (TLRY) stock rose 20%, its biggest increase in four months, while shares
of Canopy Growth (WEED) gained 11%.
Cannabis stocks have been hammered this year as the slow pace of U.S. legalization has led
many investors to abandon the sector. The Alternative Harvest ETF (MJ) that’s comprised of all
the major cannabis stocks has fallen nearly 50% this year.
The legislation faces a difficult battle in the evenly divided Senate, where 60 votes are required
to pass any bills. Many Republicans and some Democrats continue to oppose decriminalizing
cannabis.
The legislation also proposes to create grant programs to help communities that are harmed by
drug offenses and establish funding programs to provide loans to small cannabis businesses.
The bill would also require that federal non-violent cannabis related convictions and arrests be
expunged within a year of the legislation being enacted and coming into force.
The lower U.S. House of Representatives voted this past April to decriminalize cannabis,
expunge federal convictions, and impose taxes on cannabis producers.
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