Trump Backs State-Level Marijuana Regulation, Lifting Pot Stocks

(Bloomberg) -- President Donald Trump endorsed letting states decide how to regulate marijuana, in a major boost for the legal pot industry.

Colorado Republican Senator Cory Gardner said that as a result of Trump's assurances, he'll end a blockade of Justice Department nominees. Gardner held up the nominees after Attorney General Jeff Sessions rescinded an earlier Justice Department memo that shielded marijuana operations in states like Colorado from enforcement of the federal ban on the drug.

"Since the campaign, President Trump has consistently supported states' rights to decide for themselves how best to approach marijuana," Gardner said in a statement Friday. “President Trump has assured me that he will support a federalism-based legislative solution to fix this states' rights issue once and for all.”

White House Press Secretary Sarah Huckabee Sanders said Gardner's statement is “accurate.” She didn't elaborate.

“The president did speak with Senator Gardner yesterday and again today,” Sanders told reporters Friday at the White House, adding, "the president is a firm believer" in states' rights.

Marijuana is legal for medicinal use in 29 states and for recreational use in eight.

Marijuana stocks surged on the news, which removed the threat posed by Sessions's decision in January to rescind an Obama-era policy that helped states legalize recreational pot.

Canada's Canopy Growth Corp., the largest cannabis producer by market value, jumped as much as 11 percent in its biggest intraday advance since March 5. Medical-marijuana supplier Aphria Inc. climbed as much as 21 percent in Toronto trading.

Gardner said he's lifting his hold and working with colleagues on legislation that would protect marijuana operations in states that have legalized the drug. The White House didn't immediately respond to a request for comment.

Trump offered qualified support for legalization while on the presidential campaign trail, saying that medical marijuana “should happen” and that laws regarding recreational usage should be left in the hands of the states.

Sessions, on the other hand, has been an outspoken opponent of state marijuana laws.

The Justice Department under President Barack Obama created guardrails for federal prosecution of the sale and possession of cannabis, which remains illegal under federal law, and allowed legalized marijuana to flourish in states across the country. Under Sessions's approach, U.S. attorneys in states where pot is legal were given approval to prosecute cases where they see fit.

--With assistance from Toluse Olorunnipa and Justin Sink

To contact the reporter on this story: Steven T. Dennis in Washington at sdennis17@bloomberg.net.

To contact the editors responsible for this story: Joe Sobczyk at jsobczyk@bloomberg.net, Justin Blum

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