Pot stocks were blazing Monday amid a flurry of legislative action on marijuana.
A House committee last Thursday approved a bill that would require the Department of Veteran Affairs to conduct clinical trials into the therapeutic use of marijuana for veterans.
The following day, the House approved an infrastructure bill that provides funding...
Ben Nelms/Bloomberg
Pot stocks were blazing Monday amid a flurry of legislative action on marijuana.
A House committee last Thursday approved a bill that would require the Department of Veteran Affairs to conduct clinical trials into the therapeutic use of marijuana for veterans.
The following day, the House approved an infrastructure bill that provides funding for scientific research into marijuana sold by state-legalized dispensaries as well as the effects of driving under the influence of marijuana. The bill has already passed the Senate, and will be sent to President Joe Biden to be signed into law.
But perhaps most significantly, House Republicans are expected to introduce a sweeping marijuana reform bill later this week. According to a draft of the bill reviewed by Marijuana Moment, the measure would remove cannabis from the controlled substances act, effectively decriminalizing it on the federal level. It would then be regulated by states in a way similar to alcohol.
Pot stocks were rallying Monday. Curaleaf (ticker: CURLF ) was up 7.7%, Cronos Group ( CRON ) jumped 21% and Tilray ( TLRY ) gained 12.7%. Canopy Growth ( CGC ) was up 6.3%, and Aurora Cannabis ( ACB ) rose 8%.
The reform bill, proposed by Rep. Nancy Mace (R-S.C.), imposes a 3.75% excise tax on cannabis sales, which would support grants for community reentry programs, law enforcement, and Small Business Administration aid for new businesses, Marijuana Moment reported.
Mace’s office didn’t immediately respond to a request for comment.
Removing cannabis from the controlled substances act could give pot companies access to U.S. capital markets and let them uplist to U.S. exchanges, wrote BTIG analyst Camilo Lyon in a note on Monday.
In September, the House voted to include an amendment in the National Defense Authorization Act (NDAA) protecting banks that service state-legal cannabis businesses from penalties. The Senate has yet to vote on the bill, but Lyon expects it could pass later this year or by next spring, making it one of the more surefire ways of achieving some form of marijuana legislation.
Senate Majority Leader Chuck Schumer also has proposed a marijuana reform bill that is still in draft form in the Senate.
The Republican bill also likely will prompt Democrats to act on marijuana reform and may hasten the legislative outcome for the NDAA provision. The issue has mostly been taken up by Democrats in the past, but now, with Republicans wading in, Democrats may seek to prioritize cannabis legislation to eke out a victory, Lyon said in a call with Barron’s.
Many pot companies report earnings this week, with Curaleaf reporting after the closing bell Monday. Canopy Growth sank Friday after the Canadian company pushed out its profitability target date.
Weed stocks have been weak over the last month as analysts cut their third-quarter estimates amid news that
“As we head into this week with the potential for a Republican- led cannabis reform bill to be introduced in the House, and Q3 earnings that could reassure investors that things aren’t as bad as feared, we believe the group is primed to regain its positive momentum,” Lyon said.
Write to Sabrina Escobar at sabrina.escobar@barrons.com