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TORONTO — A move by the U.S. attorney general to quash an Obama-era policy that allowed legalized pot to flourish south of the border dealt a blow to marijuana stocks Thursday, but observers and industry players say the crackdown is a boon for the Canadian cannabis industry.

On Thursday, Jeff Sessions rescinded the 2013 Obama administration guidance that suggested the federal government would not intervene in U.S. states where the drug is legal, which has opened the door for several states to legalize pot for medical and recreational purposes.

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In a new memo, President Donald Trump’s top law enforcement official said he will instead let federal prosecutors where marijuana is legal decide how aggressively to enforce federal law, which still prohibits the drug.

Several marijuana stocks saw a double-digit pullback on the news, with Canada’s biggest licensed producer Canopy Growth (TSX:WEED) down as much as 19 per cent before regaining lost ground by the end to close down nearly 10 per cent at $32.32. Marijuana producer Aphria Inc. (TSX:APH), which has some U.S. exposure, was down as much as 22.6 per cent but closed down 13.79 per cent at $18.50.