Cannabis stocks are in focus today after the U.S. House of Representatives voted to pass a bill for marijuana decriminalization at the federal level. For cannabis producers, this represents a major step forward. However, questions remain as to whether it will successfully pass through Senate.
What’s Happening With Cannabis Stocks
The passing of the Marijuana Opportunity, Reinvestment and Expungement (MORE) Act would see cannabis removed from the controlled substance list. Individual states, under this new law, would be free to set their own laws for marijuana use. Cannabis stocks began rising last week as news of the vote picked up steam.
Today, lawmakers in the House voted to pass the More Act. Cannabis stocks are trading choppily on the news, after gaining in the morning session. Canopy Growth (NASDAQ:CGC) is up less than 1% while Aurora Cannabis (NASDAQ:ACB) is up 1.3%. GrowGeneration (NASDAQ:GRWG) is down slightly. Retail favorite Sundial Growers (NASDAQ:SNDL) is up 4% while fellow penny stock OrganiGram (NASDAQ:OG) has jumped 3%. Tilray (NASDAQ:TLRY) stock is up 2.5%, after pulling back from a 7% jump earlier today.
Why It Matters
It’s not hard to see how the passing of the MORE Act would be significant for cannabis stocks. The nationwide legalization of cannabis would mean a much larger market for commercial cannabis products. It would also likely compel some states to relax their policies on cannabis legalization, especially given economic incentives. Economist Stephen Easton estimates that it could lead to the U.S. netting between $45 billion and $100 billion on an annual basis.
This isn’t the first time politicians have pushed for this policy, either. In 2020, a version of the bill passed in the House, only to be stopped by then-Senate Majority Leader Mitch McConnell. That is one key difference this time around.
Today, that position is held by Sen. Chuck Schumer, who has previously advocated in favor of cannabis legalization. It’s also worth noting that in late 2021, a national poll found that 62% of U.S. adults supported the legalization of cannabis, including most Republicans.
What It Means
Cannabis stocks are continuing to experience volatility, which is not atypical around major events. As InvestorPlace contributor Chris MacDonald reported, that type of price action “appears to suggest there remains a strong contingent of investors bullish on the potential for federal cannabis legalization in the U.S.”
Investors have more reason than ever to be optimistic about the chances of this legislation passing. That type of momentum will keep pushing cannabis stocks up until a final verdict (or vote) on the MORE Act is handed down.
On the date of publication, Samuel O’Brient did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.