Aurora Cannabis, Canopy Growth, Cronos and Tilray all gained amid speculation that the move is a solid step toward broadening a market that now relies on a patchwork of local and state laws permitting marijuana sales, which have been banned under federal law for decades.
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The House Judiciary Committee approved the proposal, which would remove marijuana from the Controlled Substances Act, on a 24-10 vote after more than two hours of debate.
The vote "marks a turning point for federal cannabis policy and is truly a sign that prohibition’s days are numbered," Aaron Smith, executive director of the National Cannabis Industry Association, said in a statement.
Cannabis Trade Federation CEO Neal Levine called the vote "a historic step forward for cannabis policy reform."
The vote comes at a time when most Americans live in states where marijuana is legal in some form, and committee members from both parties agreed that national cannabis policy lagged woefully behind changes at the state level. That divide has created a host of problems — loans and other banking services, for example, are hard to get for many marijuana companies because of the federal mandate.
The bill's future is uncertain, however. It wasn't immediately clear if the proposal would be reviewed by other committees and when, or if, a vote would take place in the full House. The proposal has better chances of passing in the Democratic-controlled chamber than in the Republican-held Senate.
A measure granting legal marijuana businesses access to banking services passed the House earlier this year, but it hasn't advanced in the Senate.
Republicans on the House Judiciary Committee complained that the proposal to decriminalize cannabis had never had a hearing and lacked the bipartisan support needed to become law. "It's going nowhere," said Rep. Doug Collins, a Georgia Republican.
The legislation would authorize a 5 percent sales tax on marijuana products to fund programs such as job training and legal aid aimed at assisting people and communities harmed in the so-called war on drugs. It also would require federal courts to expunge prior marijuana convictions.
Judiciary Committee Chairman Jerrold Nadler said the nation has "treated marijuana as a criminal justice problem, instead of a matter of personal choice and public health" for too long.
"Arresting, prosecuting and incarcerating users at the federal level is unwise and unjust," the New York Democrat said. "The racial disparity in enforcement of marijuana laws has only compounded this mistake with serious consequences, particularly for minority communities."
Marijuana stocks have been under significant pressure in 2019 as companies grapple with uncertainty over the timetable for tapping into a nationwide market. Only 11 states have legalized recreational marijuana use, though more than 30 allow it for medical needs.
The major marijuana producers have seen their share prices fall between 33 percent and 70 percent this year while the S&P 500 has gained 24 percent.
The Associated Press contributed to this report.