Posted in Marijuana Investments

Investors pile into cannabis stocks after Biden announces federal pardons for marijuana possession

 Posted by  Posted on October 7, 2022

President Joe Biden said he is issuing pardons for thousands of people with federal convictions for marijuana possession. David McNew/Getty Images © David McNew/Getty Images President Joe Biden said he is issuing pardons for thousands of people with federal convictions for marijuana possession. David McNew/Getty Images

  • Investors piled into cannabis stocks after President Joe Biden announced federal pardons for marijuana possession.
  • “No one should be in jail just for using or possessing marijuana,” Biden said on Thursday.
  • The move sparked a surge in popular cannabis stocks like Tilray, Canopy Growth, and Sundial Growers.

Investors piled into cannabis stocks after President Joe Biden announced federal pardons for simple marijuana possession on Thursday.

APPLE INC.

-5.34

-3.67%

CONSTELLATION BRANDS, INC.

-9.82

-4.22%

TESLA, INC.

-15.06

-6.32%

AMAZON.COM, INC.

-5.74

-4.77%

“As I’ve said before, no one should be in jail just for using or possessing marijuana. Today, I’m taking steps to end our failed approach,” Biden said.

Those steps include federal pardons for thousands of people who have been federally convicted of cannabis possession. The move is expected to impact more than 6,500 people. Additionally, Biden called on all governors to follow his lead and pardon simple marijuana possession offenses at the state level.

Finally, Biden called on the Attorney General and Secretary of the Department of Health and Human Services to initiate a review that would remove cannabis as a Schedule I drug. “We classify marijuana at the same level as heroin – and more serious than fentanyl. It makes no sense,” Biden said. 

The announcement sparked a surge in cannabis stocks on Thursday, with shares of Tilray, Canopy Growth, and Sundial Growers all surging more than 20%. Some cannabis stocks pared those gains in early Friday trades, while others moved slightly higher. The Roundhill Cannabis ETF jumped another 11% on Friday after surging more than 20% on Thursday.

The Democrats plan to introduce a 1% tax on stock buybacks as part of Joe Biden's climate and tax bill. S&P 500 companies spent over $280 billion buying back their own shares in the most recent quarter. Stock buybacks tend to be bullish for investor sentiment because they show a company has faith in itself. The Democrats are set to introduce a 1% tax on stock buybacks as part of President Joe Biden's Inflation Reduction Act.The tax - which has been supported in the past by high-profile Democrats including Senator Elizabeth Warren - is unlikely to be welcomed by investors.A buyback is when a company repurchases its own shares in the marketplace. It returns money to investors by boosting the company's stock price, while also boosting key performance metrics such as earnings per share.Mega-cap companies including Apple and Facebook parent Meta Platforms have been major proponents of stock buybacks in recent years.And the top 20 S&P 500 companies spent a record $118 billion buying back their own shares in the first quarter of 2022, up 70% from the same quarter in 2021, according to index data. Over the last five years, that number rises to a staggering $1.24 trillion.Here are the 10 companies that have spent most on stock buybacks so far this year.Read the original article on Business Insider

The move by Biden is giving investors hope that he may move forward with further measures that could be friendly to the cannabis industry, including potential decriminalization or legalization. There is bipartisan support for cannabis legalization in Congress, but Biden signing such a bill has remained in question.

Either way, Biden’s announcement on Thursday is a step in the right direction for companies that are growing and distributing cannabis products.

But despite the strong upside moves in cannabis stocks following Biden’s announcement, there’s still a lot of ground to be made up. Shares of Tilray and Canopy Growth are down 44% and 57% year-to-date. Tilray is still down 99% from its record 2018 high of $300 per share, even after accounting for Thursday’s surge.

Author: CSN