About 45 years after Ronald Reagan called it the most dangerous drug in America, the U.S. government seems to be warming up to weed.
Driving the news: President Trump is reportedly planning to sign an executive order as soon as today that would reclassify marijuana as a Schedule III drug, a move that would make it far easier to buy and sell cannabis across the U.S.
For a country that currently classifies weed in the same category as heroin and LSD, this would mark one of the biggest shifts in U.S. drug policy in decades.
Canadian cannabis companies' stocks soared on rumours of the move late Friday. Ontario’s Canopy Growth climbed 54%, while Curaleaf led the TSX with a 38% gain.
Why it matters: The U.S. market opening up could be a lifeline for a battered industry. Since weed was legalized in Canada, domestic cannabis producers like Canopy and Tilray — once boasting valuations higher than their best customers — have lost almost all of their value.
Producers and dispensaries have struggled, in large part, because the industry dramatically overestimated how much more weed Canadians would smoke once it was legalized.
While weed is already legal in many U.S. states, reclassification at the federal level would ease the current tax, banking and distribution problems that have hobbled cannabis companies.
Zoom out: It's not just dispensaries and producers burning cash (and unused inventory). Canadians have reportedly lost more than $131 billion investing in cannabis businesses. Even a small reversal of those losses would be a welcome development.—LA