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Former Vice President Joe Biden campaigned for president in 2020 with two key promises related to cannabis. He committed to expunging prior convictions related to marijuana use. And he said that he would decriminalize cannabis use. 

Those promises remained unfulfilled after Biden became president in January 2021. Until now. On Thursday, President Biden pardoned all prior federal offenses of simple possession of marijuana. He also publicly urged governors across the U.S. to follow his lead with prior marijuana-related state convictions. In addition, Biden officially requested the Secretary of Health and Human Services (HHS) and the U.S. Attorney General to "review expeditiously how marijuana is scheduled under federal law."

Several leading cannabis stocks jumped on the news. Canopy Growth (CGC -25.60% ) shares were up 22% as of the market close on Thursday. Tilray Brands (TLRY -18.72% ) stock soared nearly 31%.

The president's pardons will have a major impact relatively soon. However, there are some administrative hurdles to jump. 

President Biden instructed Attorney General Merrick Garland to come up with a process to issue certificates of pardon to all individuals convicted in the past of violating federal laws related to simple possession of marijuana. This offense applies to possessing a small amount of marijuana for the purpose of using it but without the intention to sell it or give it to someone else. 

The pardons will apply to thousands of people. These individuals will no longer potentially be turned down for jobs, housing, or school admissions as a result of the president's action today.

Some governors have already issued pardons for people previously convicted of state marijuana charges. For example, Gov. Jared Polis of Colorado pardoned 1,351 individuals in 2021. Gov. Tom Wolf of Pennsylvania also initiated a pardon process last month for anyone previously convicted for minor, nonviolent marijuana criminal violations. Both Polis and Wolf are Democrats. It remains to be seen if other governors from either major political party will heed President Biden's call.

The effort to reclassify how marijuana is scheduled under federal law could take longer to bear fruit. Currently, marijuana is classified in Schedule 1 of the Controlled Substances Act along with dangerous drugs such as heroin. The process to change this scheduling can be initiated by HHS or by the Drug Enforcement Administration (DEA).

There hasn't been much good news for cannabis stocks lately. An industrywide supply-demand imbalance has caused problems for nearly every cannabis operator. Canopy Growth has been especially impacted by these headwinds, with its shares plunging more than 50% year to date.

President Biden's pardons won't really help cannabis companies. However, reclassifying the scheduling of marijuana potentially could.

Neither Canopy Growth nor Tilray can currently participate in the U.S. cannabis market and retain their listings on the Nasdaq stock exchange. These companies won't be able to enter the U.S. cannabis market as long as marijuana is illegal at the federal level.

Changing the schedule for marijuana won't make it legal. Although, it could pave the way for increased research into the use of cannabis-based medications. That could help Canopy Growth and Tilray, both of which are conducting clinical studies of cannabis. 

Investors shouldn't overreact to President Biden's actions on Thursday. His pardons won't directly help cannabis operators. The potential rescheduling of marijuana won't automatically open the door to the U.S. cannabis market for major Canadian companies such as Canopy Growth and Tilray.

However, these moves by the president could be key steps toward the decriminalization of marijuana at the federal level. For an industry that's seen more than its fair share of bad news over the last couple of years, President Biden just provided something positive. Yet investors must keep in mind that both Canopy Growth and Tilray have many more steps beyond this news to handle internally, these companies remain unprofitable and appear to be grasping at straws to curtail cash burn.

Keith Speights has no position in any of the stocks mentioned. The Motley Fool recommends Nasdaq. The Motley Fool has a disclosure policy.

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