Marijuana industry sees boost in investor confidence amid potential U.S. regulatory changes

The global marijuana industry, currently valued at over $444 billion, is projected to grow nearly eightfold by the end of this decade, according to Fortune Business Insights on Wednesday. The future of this burgeoning sector largely depends on the legalization status in both the U.S. and globally.

Investor interest in the sector has been piqued due to recent developments. Last month, the U.S. Department of Health and Human Services recommended a reclassification of marijuana following an 11-month review. The department suggested moving marijuana from a Schedule I to a Schedule III substance, indicating a "moderate to low potential for physical and psychological dependence," as per the Drug Enforcement Administration (DEA).

This recommendation has bolstered investor confidence in marijuana stocks between August 30 and September 15. Shares of Aurora Cannabis (NYSE:NASDAQ:ACB) surged by 112%, while Canopy Growth (NASDAQ:NASDAQ:CGC) saw an even more substantial increase of 197%.

Another potential growth catalyst for the marijuana industry is the Secure and Fair Enforcement (SAFE) Banking Act. This legislation would allow U.S.-based marijuana companies to conduct business with major banks more freely, alleviating current difficulties faced due to potential regulatory issues.

Although the SAFE Banking Act has been passed through the House multiple times, it has yet to gain traction. However, a Senate Banking Committee hearing may take place within the next five weeks, which could revive congressional discussions regarding marijuana reform.

The passage of the SAFE Banking Act could be a pivotal moment for the marijuana industry. For companies like Canopy Growth, which created special purpose vehicle Canopy USA for its U.S.-based investments, the benefits are clear. If approved, it could lead to relaxed views on marijuana by Nasdaq and potentially allow Canopy Growth to consolidate the results of Canopy USA.

Over the past five years, both Aurora Cannabis and Canopy Growth have seen their stocks decline by more than 97%.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.