Up in smoke

Marijuana enthusiasts have long dreamed of a world where they are free to light up without fear of law enforcement. Today, they got a step closer to making that dream a reality. Sort of.

Late yesterday, the Washington Post reported that President Trump called House Speaker Mike Johnson, R-La., to discuss issuing an executive order directing federal agencies to explore reclassifying marijuana from a Schedule I drug to a Schedule III drug.

For the total squares reading this, possession and sale of Schedule I drugs like heroin means harsher legal penalties, while government enforcement is more lenient for Schedule III drugs like Tylenol with codeine.

Like, what does that even mean, man?

While such a shift wouldn’t completely decriminalize marijuana, it would open many more doors for the companies that sell it legally. A lower schedule would reduce restrictions on transporting marijuana across state lines, lift the ban on cannabis research, encourage banks to do business with marijuana companies, and allow those companies to deduct business expenses.

That last point may sound totally lame to everyone who just wants to vape in peace, but it’s by far the most important. Federal law prohibits companies that sell Schedule I drugs from deducting things like payroll and marketing costs from their taxes. That keeps expenses high for marijuana companies, forcing them to operate with extremely tight margins—but if that changes, it would be enormously beneficial to their bottom lines.

That’s why marijuana stocks got higher than Snoop Dogg on 4/20 today: Canopy Growth soared 53.98%, Tilray Brands popped 44.13%, Cronos Group gained 14.74%, Aurora Cannabis jumped 18.68%, and SNDL rose 24.86%.

What comes next

Don’t get high on your own supply just yet—there’s still a long way to go before cannabis can be re-scheduled. The Biden administration began exploring a reclassification back in 2022, but the idea has been couch-locked since Trump took office. While today’s news is a step in the right direction, there’s likely months of litigious hearings and political machinations ahead.

Marijuana stocks tend to pop anytime news like this breaks, and slowly sink in the months afterwards when their momentum runs out. So for now, grab some Cheetos, turn on some Pink Floyd, and just relax, man.—MR