Cannabis stocks rally after DOJ proposal to reclassify marijuana

NEW YORK (Reuters) - Cannabis stocks including Tilray, Curaleaf, and the AdvisorShares Pure US Cannabis ETF rallied on Thursday after the U.S. Department of Justice unveiled a historic proposal to ease restrictions on marijuana.

Under the proposal, cannabis would be reclassified from a so-called Schedule I drug, which are considered highly additive with no medical benefits, to a Schedule III, signifying it has moderate to low potential for physical and psychological dependence.

"No safety concerns were identified in the FDA's review that would indicate that medical use of marijuana poses unacceptably high safety risks," the proposal says.

Shares of Tilray were up nearly 4% in afternoon trading, though it remained nearly 7% down for the year to date. Shares of Curaleaf were up nearly 0.4%, putting them up nearly 42% for the year to date. The AdvisorShares Pure US Cannabis ETF was up 1.8% and is up 40% for the year to date.

The gains came as the benchmark S&P 500 slid 0.1%.

Despite the year's gains, several cannabis-related stocks remain far below their 5-year highs. Curaleaf is down nearly 66% from its February 2021 high, while Tilray is down nearly 97% from its high from the same month.

Reclassifying marijuana represents a first step toward narrowing the chasm between state and federal cannabis laws. The drug is legal in some form in nearly 40 states.

(Reporting by David Randall; Editing by Sandra Maler)