Marijuana stocks surged on Wednesday after the US Department of Health and Human Services sent a letter to the Drug Enforcement Agency urging them to loosen rules on cannabis.
The BI Global Cannabis Competitive Peers Index surged as much as 7.5% after the announcement. Tilray Brands Inc. and Canopy Growth Corp. led gains, both advancing at least 19%.
Rachel Levine, the assistant health and human secretary, recommended to the Drug Enforcement Agency that cannabis be classified as a Schedule III drug under the Controlled Substances Act, according to a letter viewed by Bloomberg News.
After a burst of optimism following the election of Joe Biden as president in 2020, pot stocks have been mired in a slump amid delays to changes in cannabis’ status as an illegal drug.
Last October, Biden rolled out initiatives focused on marijuana, including a pardon of all prior federal offenses of simple possession, while urging governors to do the same with state offenses. As a part of the effort, he asked the HHS secretary and the US Attorney General to initiate the administrative process to review how marijuana is scheduled under federal law.