Cannabis stocks surge after Biden seeks historic marijuana reform

Beaten up US-listed cannabis stocks surged overnight after President Joe Biden took executive action to pardon all prior federal offenses of "simple marijuana possession".

Biden said criminal records for marijuana possession have resulted in "needless barriers" to employment, housing and educational opportunities.

He urged all Governors "to do the same with regard to state offenses."

Leading US cannabis stocks like Tilray Brands, Canopy Growth, Cronos Group and Aurora Cannabis rallied sharply on the news, up between 7% to 33%.

Unsurprisingly, ASX-listed names are also rallying at the open, with notable gainers including:

• ECS Botanics (ASX: ECS) +15%

• Cann Group (ASX: CAN) +11.5%

• Little Green Pharma (ASX: LGP) +7.7%

• Althea Group (ASX: AGH) +7.5%

Biden's statement on marijuana reform

Marijuana remains illegal at the federal level with medicinal and recreational use allowed in some states.

Biden called for an overhaul for how marijuana is classified and seeks to expedite an administrative review of how its scheduled under federal law.

"Federal law currently classifies marijuana in Schedule I of the Controlled Substances Act, the classification meant for the most dangerous substances," said Biden.

"This is the same schedule as for heroin and LSD, and even higher than the classification of fentanyl and methamphetamine – the drugs that are driving our overdose epidemic."

A downward spiral

Cannabis stocks have been in a downward spiral since 2021. The Global X Cannabis ETF is down -90.8% from its all-time high on 8 February 2021.

The ETF has seen plenty of short-lived rallies, inspired by similar political inquiries into potential reform. To-date, none of these actions have proved material and cannabis remains as a Schedule I substance.

Global X Cannabis ETF, weekly chart (Source: TradingView)