Yesterday brought a significant rally for cannabis stocks as good news from Capitol Hill sent the entire sector into the green.

The White House announced that plans to reschedule marijuana as a Schedule III substance are moving forward. This decision follows a recommendation from The Department of Justice (DOJ) that restrictions on cannabis be eased. If President Joe Biden moves forward with this reclassification, it will represent a significant shift toward a more cannabis-friendly economy, creating ample growth opportunities for many cannabis stocks.

However, domestic producers may have an advantage over their internationally-based peers if the reclassification moves forward, easing the restrictions that cannabis growers and sellers currently face. As The New York Times reports:

“Even though the move, which kicks off a lengthy rule-making process, does not end the criminalization of the drug, it is a significant shift in how the government views the safety and use of marijuana for medical purposes. It also reflects the Biden administration’s effort to liberalize marijuana policy in a way that puts it more in line with the public as increasingly more Americans favor legalizing the drug.”

President Biden has plenty of incentive to see that marijuana is reclassified from Schedule I to the less severe Schedule III. Recent data from the Pew Research Center shows that an overwhelming majority of Americans favor less strict marijuana policies.

With this in mind, it is likely that the reclassification will move forward and that the current rally will continue. This warrants a closer look at some of the companies best positioned to benefit.

Cannabis Stocks: Curaleaf Holdings (CURLF)

Over the past week, Curaleaf Holdings (OTCMKTS:CURLF) has surged out of penny stock territory and isn’t likely to go back. Based in Massachusetts, this cannabis producer and distributor has enjoyed impressive growth lately, rising more than 110% over the past six months. The company has an established presence in 17 states across the U.S. on both the East and West coasts, with 147 dispensaries. But even more promising is the fact that Curaleaf is focused on expanding its reach throughout international markets. It recently acquired Northern Green Canada, a deal that will help it make inroads in nations such as the U.K., Poland and Germany.

Now that its own country is gearing up to ease cannabis restrictions, though, Curaleaf will be in an even better position to continue growing. Its financials are strong, and experts will likely start recognizing it as an undervalued growth play in a sector that is about to boom.

Green Thumb Industries (GTBIF)

One of Curaleaf’s rivals also looks like a clear choice among the best cannabis stocks to buy. Green Thumb Industries (OTCMKTS:GTBIF) trades at a higher price point than CURLF, but it still has plenty of room to run as the reclassification rally continues. This cannabis retailer boasts a dynamic brand portfolio with plenty of offerings for varied consumers. It ended 2024 on a high note and reported strong earnings for Q4, including a net income of $36.3 million, up from the previous year’s $12.0 million. InvestorPlace contributor Ian Cooper provides further context, stating:

“For the full-year, its revenue jumped 4% year over year to $1.1 billion. Cash flow from operations jumped 42% year over year to $225 million. And its adjusted EBITDA of $326 million was up about 5% year over year. In addition, the company authorized a $50 million buyback program, which now brings its total repurchase plan to about $60 million.”

All this bodes extremely well for this successful cannabis stock, which has earned a strong buy consensus from Wall Street analysts, some of whose price targets exceed $30 per share. That standing is likely to improve as cannabis restrictions ease in the U.S.

Cannabis Stocks: GrowGeneration (GRWG)

This penny stock has struggled recently, but the pending shift in cannabis policy could be exactly what it needs to spark a comeback. GrowGeneration (NASDAQ:GRWG) provides the products and supplies needed to grow cannabis, a market that will likely see a surge in demand if federal restrictions are eased. Dealing with equipment for hydroponics and cannabis cultivation gives it a unique edge among cannabis stocks, helping it start out from the many growers and distributors.

Some skeptics may point to the fact the GRWG stock has fallen over the past year amid high volatility. However, as InvestorPlace contributor Muslim Farooque notes:

“The company is in a relatively strong position with zero debt and $65 million in its cash till. On top of that, GRWG stock trades at a measly 0.8 times forward sales, 13% lower than its sector median.”

Now, it is better positioned than ever to keep growing as investor enthusiasm for cannabis stocks continues to grow.

On the date of publication, Samuel O’Brient did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.