Shares of companies connected to the marijuana industry soared Thursday following a House Committee’s vote Wednesday to pass a bill that effectively legalizes marijuana on a federal level.
Shares of marijuana companies Canopy Growth, Aurora Cannabis, Aphria Inc and Tilray Inc all shot up between 8 percent and 15 percent, according to Reuters.
The jump comes after the House Judiciary Committee on Wednesday voted 24-10 to pass the Marijuana Opportunity Reinvestment and Expungement (MORE) Act, marking the first time in history that a congressional committee has voted in approval of the legalization of marijuana.
“We think federal legalization would be a big positive for investor sentiment surrounding cannabis equities, which have been battered by oversupply and a steep price decline for the underlying commodity since becoming legal in Canada,” Garrett Nelson, senior equity analyst at CFRA Research, told Reuters.
Wednesday’s vote comes just months after the Democratic-controlled House passed a bill to advance legislation that would allow banks to provide services to marijuana companies in states where the substance is already legal.
The MORE Act, if signed into law, would have marijuana removed from the Controlled Substances Act, which would federally legalize cannabis across the country. Past federal cannabis convictions would be expunged.
The bill would also mandate a 5 percent federal sales tax on marijuana products that are manufactured in or imported into the country, Reuters notes.
The legislation will now go before the full House for a vote, and, if passed, would then go to the GOP-controlled Senate.
It is unlikely the Senate would pass the bill.
The jump in stocks is welcome for an industry hurting for a majority of the year with shares down roughly 25 percent overall, according to Reuters. The drop in shares is due, in part, to a slow rollout of retail stores and oversupply in Canada, in addition to uncertainties related to regulations.