What happened
For marijuana stocks to make meaningful gains, change has to happen from the top down. And while the ultimate hope of decriminalization at the federal level hasn't been fulfilled, investors -- and potheads generally -- got a great and unexpected piece of good news from the government at nearly the end of Thursday's trading session.
As a result, late in the trading day many North American weed stocks saw double-digit gains. Canada's Canopy Growth (CGC -3.01%) closed more than 22% higher, while compatriot Organigram Holdings (OGI -3.63%) rose by 17%. Numerous U.S.-based weedies did even better; Green Thumb Industries (GTBIF -5.60%), to name one, advanced by 33%. Even pot-adjacent stocks did well -- Scotts Miracle-Gro (SMG -1.25%) increased nearly 4%.
So what
That afternoon, President Joe Biden announced that he is pardoning individuals convicted by the government of simple misdemeanor possession of marijuana.
At a stroke, that not only reduces the legal stigma associated with the drug, it builds momentum for lawmakers to eventually pull the decriminalization lever -- which would de facto make cannabis consumption and sale legal throughout the country.
As president, Biden typically doesn't make spontaneous or half-considered moves. Accompanying this pledge, he said he's also tapping the federal departments of justice and health and human services to review how pot should be considered under the nation's laws.
Now what
This snowballing momentum can only, and greatly, help all producers, distributors, retailers, and consumers of the drug. The potential benefits to the business of a Green Thumb and -- by association, a Scotts Miracle-Gro -- are obvious.
Yet it should be a boon for Canadian companies too, as the route to success out of their competitive and rather limited national market is the vast U.S. consumer base -- this is why Canopy Growth, Organagram, and other north-of-our-border weedies also gained on the news.
