Marijuana stocks experienced a significant downturn on Thursday following President Donald Trump’s executive order aimed at easing restrictions on cannabis. However, the president’s move stopped short of full legalization, leading to skepticism within the industry.
The AdvisorShares Pure US Cannabis ETF saw a dramatic drop of 27% after Trump announced that the Department of Justice would reclassify marijuana as a substance with accepted medical use, allowable for patients with prescriptions. “We have people begging me to do this. People in great pain,” the president remarked during the announcement.
This executive order aims to facilitate medical research on cannabis, addressing the current barriers posed by the 1970 US Controlled Substances Act, under which marijuana remains illegal, despite many states allowing its use for both recreational and medical purposes.
Analyst Jaret Seiberg from TD Cowen noted that while the order represents a “symbolic win” for the cannabis sector, it doesn’t alter existing federal law. “State-legal recreational and medical markets will still be in violation of federal law,” he stated, suggesting that the announcement is unlikely to significantly affect capital markets or banking access for cannabis businesses. Despite the recent drop, the AdvisorShares cannabis ETF remains up 28% for the year so far.
Interestingly, the former president Joe Biden had also proposed reclassifying marijuana during his term but did not finalize the process. Trump’s approach contrasts with his previous administration’s stricter stance on cannabis, particularly under Attorney General Jeff Sessions, who had rescinded more lenient policies.
As the cannabis industry navigates these complex developments, it remains to be seen how this executive order will shape the future of marijuana legislation in the United States.
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