Cannabis ETFs get a boost following President Biden’s expungement announcement

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Whether cannabis reform is coming isn’t certain, but cannabis investments are gaining strength

President Joe Biden announced last Thursday that he is pardoning all minor federal convictions for marijuana possession. The move, loaded with symbolism, has sent marijuana-related exchange-traded funds (ETF) skyrocketing.

The president urged governors to extend clemency to a much larger number of people who have violated state laws criminalizing marijuana possession. And as if that weren’t enough, he called for a review of how marijuana is classified under federal law.

Over the past few years, marijuana ETFs offering exposure to the industry in the US have suffered significant declines, especially as the industry has taken longer than expected to develop. However, Biden sent these ETFs to record highs following his announcement late last week.

A clear example was evidenced by the first and largest ETF to offer exposure to the US market, AdvisorShares Pure US Cannabis ETF. The firm was able to gain traction by 33% on Thursday. The ETFMG Alternative Harvest ETF added 20% and the ETFMG US Alternative Harvest ETF gained 26%. A day after the announcement, the ETFs continued to rise before falling off their highs.

“President Biden’s announcement is obviously tremendously uplifting for the industry,” Jason Wilson, cannabis research and banking expert at ETF Managers Group, told ETF.com in an interview. “There’s always been some level of anxiety that President Biden might not sign a substantive reform or even incremental reform, but, based on his actions, it sure looks like he went for it.”

While the news is extremely positive, industry experts recommend continuing to work cautiously until Congress officially announces legalization legislation. It’s important to remember that many cannabis investors got burned in the past when encouraging news also came along, something that didn’t pay off as decriminalization efforts stalled again.