Pot firms rally after US reclassifies marijuana as less dangerous drug

By Mrinalika Roy and Christy Santhosh

April 23 (Reuters) - Shares of cannabis firms surged on Thursday after the U.S. government moved to reclassify the Food and Drug Administration-approved and state-licensed marijuana as a less-dangerous drug.

Cronos Group CRON.O, Aurora Cannabis ACB.O, Canopy Growth WEED.TO, Tilray Brands TLRY.O jumped between 6% and 13% following the announcement, which many in the industry see as "most consequential federal cannabis policy development in decades".

In a post on X, Acting Attorney General Todd Blanche said the Department of Justice was "immediately rescheduling FDA-approved marijuana and state-licensed marijuana from Schedule I to Schedule III." The department is also initiating an expedited hearing to consider the broader rescheduling of marijuana.

Industry executives applauded the decision.

"Rescheduling has the potential to accelerate clinical research, broaden access and elevate the quality, consistency, and safety standards that establish medical cannabis as a legitimate pillar of modern healthcare," Tilray CEO Irwin Simon said in a statement.

Cannabis firms will also no longer be subject to Section 280E, a provision of the U.S. federal tax that prevents businesses dealing in Schedule I- and II-controlled substances from claiming tax credits and deductions for business expenses.

Verano CEO George Archos had said, "We've previously quantified rescheduling would save Verano an estimated $80 million in annual 280E expenses that we could invest back into our operations, putting us on a level-playing field with any other legal business."

The decision could also ease access to funding as federal restrictions have long kept most banks and institutional investors on the sidelines, forcing cannabis producers to rely on costly loans or alternative lenders.