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International Business Pot stocks surge on news Trump favours giving states latitude on legalization

U.S. 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. Pot stocks Friday surged on the news.

Mr. Gardner said that as a result of Mr. Trump’s assurances he’ll end a blockade of Justice Department nominees. Mr. Gardner held up the nominees after Attorney-General Jeff Sessions rescinded an earlier Justice Department memo that shielded marijuana operations in states such as Colorado from enforcement of the federal ban on the drug.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,” Mr. Gardner said in a statement on 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.”

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White House press secretary Sarah Huckabee Sanders said Mr. Gardner’s statement is “accurate.”

“The President did speak with Senator Gardner yesterday and again today,” Ms. Huckabee Sanders told reporters on 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 Mr. 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 per cent in its biggest intraday advance since March 5. Medical-marijuana supplier Aphria Inc. climbed as much as 21 per cent in Toronto trading. The Horizons Marijuana Life Sciences ETF ended the day with a gain of 6.4 per cent.

Mr. 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.

Mr. 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.

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

The Justice Department under former 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 Mr. Sessions’s approach, U.S. attorneys in states where pot is legal were given approval to prosecute cases where they see fit.

Vahan Ajamian, an analyst with Beacon Securities, called Trump’s commitment “a massive gamechanger” for the marijuana sector.

“This is consistent with our thesis and excellent for U.S. cannabis operators,” he said in a note to clients.

Marc Lustig, chief executive of CannaRoyalty, called the change in tone at the U.S. federal level “significant.”

“Given how much larger the U.S. cannabis market is in comparison to Canada or any other country this development is potentially game-changing for industry participants,” he said in an emailed statement. “As one of the largest licensed operators of cannabis in the state of California, we expect this change of direction to significantly clarify things in state-legal markets.”

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With files from The Canadian Press

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