Cannabis stocks staged a strong rally on Wednesday, with most Canadian and U.S. companies posting double-digit percentage gains, buoyed by hopes the Democrats may take the Senate and pursue a more pro-reform agenda.
The sector took off after Raphael Warnock won one of two Senate runoffs in Georgia early Wednesday, according to the Associated Press, bringing Democrats a seat closer to a Senate majority. With 98% of the expected vote total reported, Democratic challenger Jon Ossoff was leading Republican Sen. David Perdue by just 0.4 percentage point, according to data aggregated by the AP.
President-elect Joe Biden and his Vice President Kamala Harris are widely held to be more in favor of reforming the U.S.’s strict cannabis laws which continue to classify the substance as a Schedule I drug, alongside heroin. That classification has hampered the development of the sector which is confined to those states that have legalized cannabis for medical or recreational use and kept companies locked out of the federally insured banking system.
Hopes for reform were already boosted by the success in November ballots of cannabis measures in New Jersey, Arizona and South Dakota, where voters approved adult-use cannabis, and Mississippi, where they voted for medical cannabis. Those measures mean about a third of Americans now live in states that have legalized cannabis for recreational use..