Cannabis stocks rise after President Biden mentions plant in State of the Union speech

By Steve Gelsi

Biden mentions review under way by DEA of cannabis as Schedule I substance under federal law

Shares of both U.S. and Canadian cannabis stocks moved up on Friday after President Joe Biden mentioned the federal government's current effort to potentially reclassify the plant under federal law in his State of the Union speech.

Also read: HHS recommends rescheduling cannabis, and stocks in the sector rally

Without mentioning any update of the process by the Drug Enforcement Administration, Biden said he's directed his cabinet to review the federal classification of marijuana as part of his efforts on police reform.

Also read: HHS recommends rescheduling cannabis, and stocks in the sector rally

Biden said he expunged thousands of convictions after charting out a course to do so October "because no one should be jailed for using or possessing marijuana."

Also read: Curaleaf, Truelive, Verano could benefit from marijuana reclassification

The AdvisorShares Pure US Cannabis ETF MSOS advanced 3.6%. Curaleaf Holdings Inc. (CURLF) rose 0.2%, Trulieve Cannabis Corp. (TCNNF) gained 4.2%, Green Thumb Industries Inc. (GTBIF) rose 3.4% and Cresco Labs Inc. (CRLBF) climbed 3.3%.

Verano Holdings Corp. (VRNOF) moved up by 4.6%, Ayr Wellness (AYRWF) rose by 1.6% and TerrAscend Corp. (TSNDF) moved up by 2.8%.

Canadian cannabis stocks also rose, as Canopy Growth Corp. (CGC) jumped 3.5%, Tilray Brands Inc. (TLRY) rose by 5.8% and Aurora Cannabis Inc. (ACB) gained 4.3%.

The U.S. Department of Health and Human Services in August recommended cannabis be lowered to Schedule III from Schedule I. The change would potentially remove the 280E tax measure that currently requires cannabis companies to pay millions because they're not allowed to claim standard business deductions.

"For Curaleaf, removal of 280E could equate to savings of more than $150 million in excess tax contributions," said Matt Darin, chief executive of Curaleaf, in a statement emailed to MarketWatch. "By reducing the tax burden, cannabis businesses of all sizes will be better positioned to thrive and the true potential of this industry realized."

The move could also finally give companies access to the federally insured banking system, from which they are currently excluded.

"[Biden's] remarks before a national audience signal the president's ongoing commitment to advancing cannabis reform," said David Culver, senior vide president of public affairs at the U.S. Cannabis Council, in a statement.

A record 70% of Americans think cannabis use should be legal, according to a Gallup poll. Late last year, Ohio became the 24th state in the U.S. to approve a retail cannabis sales to adults 21 and older, with other efforts now gaining traction in Virginia, Florida, Hawaii and New Hampshire.

Also read: Trulieve, Green Thumb, Verano stocks rise on stronger-than-expected cannabis revenue

-Steve Gelsi

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03-08-24 1522ET

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