Cannabis investors, and those following legalization, have been on quite the ride since the start of 2021 with this industry’s stocks soaring and plunging in a matter of hours. On or about February 10, 2021, year-to-date gains for Tilray (TLRY) exceeded 670%, Canopy Growth (CGC) 110%, and Aurora Cannabis (ACB) 20%. The very next day, these cannabis stocks tumbled quite a bit.
Reddit & Shifting Public Perception
Cannabis has been a blazing hot topic on the newsworthy WallStreetBets Reddit thread lately but this Reddit army isn’t the only factor driving the recent stock trading activity. A shifting public perception and political landscape are also primary contributors. According to a recent Gallup poll, a record-high 68 percent of Americans (including 83 percent of Democrats and 72 percent of Independents back marijuana legalization).
Growing Support for Medical Cannabis Legalization
President Biden’s administration has indicated support for medical cannabis legalization, the modest rescheduling of cannabis under federal law, expunging prior cannabis convictions, and allowing states to enact their own cannabis laws without federal intervention. In addition, this year, the Democrats regained control of the House and Senate for the first time since 2011, and a trio of U.S. Senators are leading the push for comprehensive federal cannabis reform legislation.
On February 1, 2021, Senators Cory Booker (D-NJ), Ron Wyden (D-OR) and Chuck Schumer (D-NY) issued the following joint statement on their commitment to advancing this legislation:
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. 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.
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.
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. Getting input from stakeholder groups will be an important part of developing this critical legislation.
Even prior to Biden’s presidency, support for cannabis legalization or at least, decriminalization, steadily increased over the past several years and more lawmakers are publicly advocating for the same. On December 4, 2020, Congress voted 228-164 to pass H.R. 3884—the Marijuana Opportunity Reinvestment and Expungement Act of 2019 (the “MORE Act”).
On the business side, the MORE Act would allow the SBA to provide loans and other relief to cannabis and cannabis-ancillary businesses and would completely remove marijuana from the federal Controlled Substances Act (decriminalizing and descheduling it). The descheduling of marijuana would eliminate the banking access woes, IRC 280E tax implications and intellectual property protection issues which are faced by these businesses as a result of the conflict between federal and state laws.