Investors pile into cannabis stocks after Biden announces federal pardons for marijuana possession

• Investors piled into cannabis stocks after President Joe Biden announced federal pardons for marijuana possession.
• "No one should be in jail just for using or possessing marijuana," Biden said on Thursday.
• The move sparked a surge in popular cannabis stocks like Tilray, Canopy Growth, and Sundial Growers.

Investors piled into cannabis stocks after President Joe Biden announced federal pardons for simple marijuana possession on Thursday.

"As I've said before, no one should be in jail just for using or possessing marijuana. Today, I'm taking steps to end our failed approach," Biden said.

Those steps include federal pardons for thousands of people who have been federally convicted of cannabis possession. The move is expected to impact more than 6,500 people. Additionally, Biden called on all governors to follow his lead and pardon simple marijuana possession offenses at the state level.

Finally, Biden called on the Attorney General and Secretary of the Department of Health and Human Services to initiate a review that would remove cannabis as a Schedule I drug. "We classify marijuana at the same level as heroin - and more serious than fentanyl. It makes no sense," Biden said.

The announcement sparked a surge in cannabis stocks on Thursday, with shares of Tilray, Canopy Growth, and Sundial Growers all surging more than 20%. Some cannabis stocks pared those gains in early Friday trades, while others moved slightly higher. The Roundhill Cannabis ETF jumped another 11% on Friday after surging more than 20% on Thursday.

The move by Biden is giving investors hope that he may move forward with further measures that could be friendly to the cannabis industry, including potential decriminalization or legalization. There is bipartisan support for cannabis legalization in Congress, but Biden signing such a bill has remained in question.

Either way, Biden's announcement on Thursday is a step in the right direction for companies that are growing and distributing cannabis products.

But despite the strong upside moves in cannabis stocks following Biden's announcement, there's still a lot of ground to be made up. Shares of Tilray and Canopy Growth are down 44% and 57% year-to-date. Tilray is still down 99% from its record 2018 high of $300 per share, even after accounting for Thursday's surge.