Cannabis stocks are hot ahead of a House panel hearing on a federal legalization bill

Investor optimism over the possibility of federal cannabis legalization has contributed to a strong rally in beaten-down pot stocks.

The Alternative Harvest ETF has gained more than 10% in March, and its on pace for its best month since February 2021. The exchange-traded fund was just about flat year to date but down 50% over the past 12-months. The recent upswing in marijuana shares mirrors moves higher seen early last year on similar reform hopes.

On Wednesday, the House Rules Committee is set to hold a hearing on the Marijuana Opportunity Reinvestment and Expungement Act, which would decriminalize cannabis at the federal level. The bill — better known as the MORE Act — would also create provisions for banking and consumer packaged goods sales. The measure is expected to head to the full House for a vote Friday.

“I’ve been very optimistic about the MORE Act passing the House.” Rep. Ed Perlmutter, D-Colo., told CNBC ahead of the hearing. The bill faces an uncertain future in the razor-thin Democratically controlled Senate.

Perlmutter, a member on the Rules panel a co-sponsor of the MORE Act, has long been a supporter of legalizing cannabis. He’s also sponsor of the Secure and Fair Enforcement Banking Act, a cannabis reform bill designed to provide multistate operators access to banking and other financial services. Colorado and Washington became the first states to legalize the recreational use of marijuana in 2012. [Read more at CNBC]