Cannabis Stock Market Sees Surge After 3 Democratic Senators Confirm Commitment to Legislative Reform
The cannabis stock market saw an uptick on Tuesday after Democratic Sen. Chuck Schumer, along with Sens. Ron Wyden of Oregon and Cory Booker of New Jersey announced they would make reforming legislation on cannabis a key priority in the current Congress. In a joint statement, the senators pointed to the importance of ending the harm done by the War on Drugs as a key reason for this push for federal legalization.
Among the stocks that experienced an increase after this announcement are Tilray Inc (TLRY), which was up 16%, while the company it will soon be merging with Aphria Inc (APHA) was up 11%.
Undoing a “Sad Chapter in American History”
“The War on Drugs has been a war on people—particularly people of color. Ending the federal marijuana prohibition is necessary to right the wrongs of this failed war and end decades of harm inflicted on communities of color across the country,” they said in the statement, “But that alone is not enough. As states continue to legalize marijuana, we must also enact measures that will lift up people who were unfairly targeted in the War on Drugs.”
Last year, the ACLU reported that on average, a Black person is 3.64 times more likely to be arrested for marijuana possession than a white person, even though Black and white people use marijuana at similar rates.
“We are committed to working together to put forward and advance comprehensive cannabis reform legislation that will not only turn the page on this sad chapter in American history, but also undo the devastating consequences of these discriminatory policies. The Senate will make consideration of these reforms a priority,” said Schumer, Wyden, and Booker in their statement.
Analysts say that while this isn’t the first time Schumer has made statements about backing the federal legalization of cannabis, this is the first time lawmakers have made a formal commitment to make it a priority. Some expect that the MORE Act, combined with the SAFE Banking Act could form the basis for new legislation.
The MORE Act passed in the House of Representatives in December, while The SAFE Banking Act was passed in September of 2019. The former bill, sponsored by then-Senator and now Vice President Kamala Harris will look to de-schedule cannabis from The Controlled Substances Act and pursue expungement of criminal records for cannabis, while the latter would keep banks and financial institutions safe of criminalization if serving cannabis businesses in legal states.
Cannabis Stocks See a Surge
In addition to Tilray and Aphria’s increases on Tuesday, Aurora Cannabis (ACB) was up 10%, Canopy Growth (CPY) (WEED) was up 6% and Cronos Group Inc (CRON) was up an impressive 12%.
Among U.S. companies, Curaleaf Holdings Inc. (CURLF) experienced a 4% increase, Cresco Labs (CL) was up 6%, and Green Thumb Industries was up 4%. Green Thumb Industries, a software company targeted at the cannabis industry, was up 5%.
According to Market Watch, Cannabis Exchange Traded Fund (ETF) has gained 46% in the year-to-date.
This wasn’t the first time this year that the cannabis ETF experienced a major surge. After the Democrats won the Georgia Senate race in January, the ETF experienced an increase greater than it had seen since March 2020. At the time, a Cannacord analyst said, “The Democratic Party will now effectively control the House, the Senate and the White House, which could pave the way for a number of pro-cannabis initiatives that have been bottlenecked in the House of Representatives to begin working their way through applicable political/legislative channels.”
The three Democratic senators plan to move immediately on their action. “In the early part of this year, we will release a unified discussion draft on comprehensive reform to ensure restorative justice, protect public health and implement responsible taxes and regulations,” they said in their joint statement, “Getting input from stakeholder groups will be an important part of developing this critical legislation.”