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The next pot of gold? Marijuana stocks surge higher on promise of reclassification

The next pot of gold? Marijuana stocks surge higher on promise of reclassification

Though there has never been a shortage of enthusiasm and interest in cannabis stocks, many of them have failed to take off, with some even dropping more than 90% from their initial public offering (IPO) price and turning into penny stocks.

One of the crucial depressing factors for these shares has been the plant’s long-standing highly restrictive classification, which places it in the same crowd as heroin and lysergic acid diethylamide (LSD).

Things are, however, set to take a massive turn – likely for the better for cannabis stocks – as the Biden administration is preparing to take the ‘Devil’ out of the ‘Devil’s lettuce’ and significantly reduce nationwide restrictions. 

Still, it is noteworthy that despite there being broad support, given the vast differences between marijuana and other drugs under the same classification and general expectations that the Food and Drug Administration (FDA) will approve the motion, the rescheduling of cannabis is not yet set in stone. 

Cannabis stocks react to plans to reclassify

Stocks of various cannabis companies, such as Verano Holdings (OTC: VRNOF), Curaleaf Holdings (CSE: CURA, OTC: CURLF), Organigram (NASDAQ: OGI), and Canopy Growth (NASDAQ: CGC), were, as might be expected, among the first to offer strong reactions. 

According to a list that tracks these companies’ performance, the shares have risen up to 78.85% within the last 24 hours of trading, with the biggest recorded gainer being CGC.

Top cannabis stocks with price changes. Source: Barchart

Other major gainers include Leafly Hldgs (NASDAQ: LFLY) at 51.43%, Tilray Brands (NASDAQ: TLRY) at 39.55%, Trulieve Cannabis (CSE: TRUL/OTC: TCNNF) at 38.17%, Ayr Wellness (CNSX: AYR.A) at 32.17%, and GrowGeneration (NASDAQ: GRWG) at 30%, with multiple other being substantially – though less than 30% – in the green on the daily charts.

Still, not all weed stocks have seen a price surge on the news about the pending reforms, with the weed dividend paying stock Constellation Brands (NYSE: STZ) being the biggest daily loser with a 2.96% drop. Admittedly, however, STZ is more recognizable for its beer, wine, and spirits business than as a marijuana company.

In the long run, various medical firms are also likely to see significant benefits as the reclassification of cannabis will enable easier study for concrete health benefits of the plant, which would, in turn, also enable more pharmaceutical companies to expand their business by potentially using marijuana in their products.

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