Nearly 40 U.S. states have legalized marijuana use in some form, but it is still entirely illegal in some states as well as at the federal level. However, on October 6 President Joe Biden took the first steps toward overhauling U.S. marijuana policy by pardoning thousands of people with federal offenses for simple marijuana possession and initiating a review of how marijuana is classified.
Those convicted of simple marijuana possession have historically faced enormous “collateral” consequences, such as being denied employment, housing, or educational opportunities, and the President stated that he hoped the new policies would begin to address these unfair consequences.
The announcement by the President fulfills one of his key campaign promises, and it is likely to please a large majority of his political base in the run-up to the November midterm elections.
"Too many lives have been upended because of our failed approach to marijuana. It's time that we right these wrongs," Biden said, later urging state governors to follow suit.
"Just as no one should be in a federal prison solely due to the possession of marijuana, no one should be in a local jail or state prison for that reason, either," Biden said.
According to a senior administration official, more than 6,500 people with prior federal convictions could be affected by the pardons.
The Benefits of Reclassification
Reclassification would be a first step toward wider legalization, which is backed by a majority of Americans, and would have significant impacts on companies, law enforcement, and citizens.
Currently, marijuana is considered a Schedule I substance under the Controlled Substances Act, meaning that it has a high potential for abuse, no currently accepted medical use in treatment in the United States, and a lack of accepted safety for use under medical supervision. This is the same classification as heroin and LSD and a higher classification than fentanyl and methamphetamine. Not only does this classification fly in the face of scientific research, but it ignores the more than 5 million Americans who used medical marijuana as of 2021, according to data from the Marijuana Policy Project.
Marijuana’s illegal status at the federal level has prevented most major banks from providing their services to cannabis-related businesses. But if marijuana classification were to ease, this problem would be remedied, and major stock exchanges would be allowed to list businesses that are in the cannabis trade. Foreign companies would also potentially be able to sell their products in the U.S.
Currently, U.S. marijuana companies must trade their shares over the counter or by listing in Canada; the Nasdaq and New York Stock Exchange are prohibited from listing them.
While certain policies will change, Biden said some rules would need to remain: “Finally, even as federal and state regulation of marijuana changes, important limitations on trafficking, marketing, and under-age sales should stay in place," Biden said.
Cannabis growers and sellers saw their shares surge following Biden's comments; Tilray Brands and Canopy Growth both jumped more than 20%.
By 2026, the U.S. cannabis market is forecast to grow to $40 billion in sales (up from $25 billion in 2021), while the global cannabis market is forecast to hit $55 billion by that time, according to projections made last month by the cannabis-focused research firm BDSA. Industry experts expect U.S. federal reforms could drive those numbers much higher.