U.S. marijuana stocks rose slightly on Wednesday after Democratic Sens. Chuck Schumer, Ron Wyden and Cory Booker announced the release of a first draft of legalization intended to end federal cannabis prohibition.
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But shares of Canadian cannabis producers fell as they have made limited inroads into the U.S. market.
The “discussion draft” of the measure, called the Cannabis Administration and Opportunity Act, would decriminalize and de-schedule cannabis, expunge some cannabis-related offenses, and allow for reinvestment in communities hit hard by the War on Drugs.
“It’s past time to bring our nation’s outdated, racist cannabis laws into the 21st century and ensure equal justice for Americans hurt by the failed war on drugs,” Wyden tweeted on Wednesday. “Our legislation will do just that.”
The law would also move regulatory oversight from the Drug Enforcement Administration to other agencies. However, it would also allow states to set their own cannabis policies. And it would face a tough battle in the Senate, where Democrats hold 50 seats and some Republicans remain wary of lifting pot restrictions.
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More States Legalizing
In February, Schumer, Booker and Wyden said they would make “consideration” of cannabis reform a priority this year. They said they planned to release a “discussion draft” on the matter in the early part of the year.
The legislation would come as cannabis legalization spreads across the U.S. Eighteen states and Washington, D.C., have fully legalized cannabis. Thirty-seven states allow medical marijuana.
As more legal barriers in states fall, bigger U.S. marijuana producers have been able to rapidly expand. But along the way, questions have been raised about whether smaller businesses and communities disproportionately affected by drug laws, without the access to big investors, will benefit equally.
With a Democrat in the White House and the party controlling the House, efforts to legalize cannabis have gained momentum. However, President Biden has supported decriminalization, rather than legalization.
Rep. Jerry Nadler and other lawmakers in May reintroduced the MORE Act, which would decriminalize marijuana at the federal level and expunge prior convictions.
Marijuana Stocks Split
Among U.S. marijuana stocks, which trade in Canada and over the counter, Green Thumb Industries (GTBIF) rose 2.5%. Curaleaf (CURLF) added 2.2%. Trulieve (TCNNF) was 1.7% higher.
Canadian marijuana stocks fell modestly. Canopy Growth (CGC) dipped 0.7% in the stock market today. Tilray (TLRY) lost 0.4%. Cronos Group (CRON) fell 1.6%.
Marijuana stocks, during parts of this year and last year, have rallied on the prospect of U.S. legalization. But analysts at Cowen, in April, tried to temper the enthusiasm over legalization proposals.
“We caution against overreacting,” they said. “Bills get introduced all the time. Nothing requires action.”
They continued: “Our view is that Congress won’t get serious about legalization until after it enacts the Build Back Better recovery bill and the COVID-19 health crisis is clearly in the rearview mirror.”
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