What happened
Cannabis stocks have become quite the hot item on the stock exchange lately, a trend that stretched into Monday's trading. A clutch of "green" companies saw their share prices improve on the first trading day of the week.
These included U.S. multi-state operators (MSOs) Curaleaf Holdings(OTC: CURLF) and Cresco Labs(OTC: CRLBF), which rose a respective 10% and 8% on the day. Canadian weed companies also landed well in positive territory, with Organigram(NASDAQ: OGI) advancing at an 18% clip and Cronos Group(NASDAQ: CRON) rising by 9%.
So what
It's no accident that these rises came just before the influential rules committee of the U.S. House of Representatives is set to meet on an appropriations bill. Although that bill covers the Department of Defense, like most large spending bills it also involves other economic sectors.
And this one is accompanied by separate amendments that affect the cannabis industry, notably one that would block the military from testing certain of its members for weed.
Interestingly, the anti-testing prohibition has been introduced by Florida Representative Matt Gaetz, a Republican -- typically the U.S. political party that has been most resistant to drug law reform. This illustrates the fact that such reform enjoys broad support throughout the country, and is beginning to win allies in the highest levels of Congress and the federal government.
The timing of such a push in the House is fortuitous. President Joe Biden was apparently the person behind a recent formal request from the federal Department of Health and Human Services (HHS) to the Drug Enforcement Agency (DEA) to reclassify marijuana.
Weed is currently a Schedule I substance, according to the DEA's classification system. Ostensibly, this makes it among the most dangerous and risky drugs on the scene. The HHS request is for the DEA to move it to Schedule III, a far more innocuous category. This would de facto legalize the drug throughout the country.
Now what
The pillars of what many critics have called "marijuana prohibition" aren't exactly tumbling, but they're starting to buckle and shake. Again, public support for recreational pot legalization is strong and widespread; even the most stubborn pot-hating lawmaker can't fight against such increasingly stacked odds.
I should emphasize that even if measures such as Gaetz's pass in the House, we still will not be on the brink of total decriminalization. But it'll be more baby steps toward that important goal, and Curaleaf, Cresco, Organigram, Cronos, and nearly every other cannabis company on this continent should immediately benefit.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Cresco Labs and Organigram. The Motley Fool has a disclosure policy.
