What happened

It's the Tuesday after the holiday weekend, and shares of marijuana stocks seem to have benefited greatly from the rest. Across the board, shares of cannabis companies are shooting higher. Tilray Brands (TLRY 1.71%) is tacking on a solid 4.5% gain as of 12:45 p.m. ET, and Aurora Cannabis (ACB -0.15%) is up 6.8%, while Curaleaf Holdings (CURLF 5.26%) gains 14.1%, Green Thumb Industries (GTBIF 3.56%) gains 14.6%, and industry bellwether Canopy Growth (CGC 2.41%) is doing best of all -- up a powerful 27.6%.

And they all have President Joe Biden to thank for it.

So what

As you've probably heard by now, late last month the U.S. Department of Health and Human Services (HSS) recommended to the U.S. Drug Enforcement Agency (DEA) that the latter downgrade marijuana from a Schedule I controlled substance to just a Schedule III controlled substance -- something that investors have waited nearly a year to see. But in fact, the news got even better over the weekend.

During the 2020 presidential campaign, then-VP hopeful Kamala Harris promised that the Biden administration, if elected, would "decriminalize marijuana, and we will expunge the records of those who have been convicted of marijuana." But then, it didn't actually do that.

In a disheartening development for marijuana investors, then-White House Press Secretary Jen Psaki later clarified that the president did not, in fact, back efforts in Congress to legalize marijuana at all.

But this changed over the holiday weekend.

As cannabis news source Marijuana Moment reported on Monday, new White House Press Secretary Karine Jean-Pierre now says that, in fact, President Biden has "always supported the legalization of marijuana for medical purposes" (emphases added). And with this statement now in hand, it seems more likely than ever that the DEA will go along with administration policy and downgrade marijuana to a Schedule III controlled substance. In turn, this designation that would facilitate medical research on the drug, and presumably make it more likely that medical marijuana (at least) will now become legal at the federal level.  

Now what

Admittedly, this is still a step short of the full-scale marijuana legalization that investors have been looking forward to since 2020. But it's a step toward that goal. It's also worth pointing out that this is how legalization has tended to work at the state level, with state governments first testing the waters by legalizing medical pot, and then, when the world doesn't end, proceeding to full-scale legalization next.

Investors in marijuana stocks may therefore be correctly interpreting this week's news when they assume that, while it may take some time, marijuana is now on a confirmed path toward legalization.

Granted, it still remains to be seen if legalizing marijuana (whether medical or otherwise) will translate into profits for marijuana stocks. Financial data from S&P Global Market Intelligence suggest that this may be easier said than done. Canopy Growth, Aurora Cannabis, Tilray, and Curaleaf, for example, have all remained decidedly unprofitable for years, despite marijuana having been legalized in Canada already. On the other hand, Green Thumb Industries does seem to have figured out the trick of eking out (very small) profits from the U.S. cannabis trade.

If you're planning to bet on marijuana legalization, and buy stock in a cannabis company yourself, the almost uniquely profitable Green Thumb stock might be the best place to start.