MW Cannabis stocks drop as DEA sets drug-rescheduling hearing after November election
By Steve Gelsi
DEA schedules Dec. 2 public meeting on a proposal to move cannabis to less-restrictive Schedule III legal classification
U.S. cannabis stocks fell hard Tuesday after the Drug Enforcement Administration scheduled a hearing on its proposal to change the classification of cannabis to the less restrictive Schedule III for Dec. 2, after the presidential election, according to an announcement late Monday.
The DEA has not issued a timeline for its process to potentially change the classification of cannabis, which has been a Schedule I drug since the Controlled Substances Act went into effect in 1970, but some in the cannabis industry had hoped for a final decision before the U.S. election.
The DEA's move "puts greater election risk" around rescheduling if cannabis is not reclassified before the next administration takes over in January, Aaron Grey, an analyst at Alliance Global Partners, said Tuesday.
The AdvisorShares Pure U.S. Cannabis exchange-traded fund MSOS fell 10.3% Tuesday, while Curaleaf Holdings Inc. (CURLF) dropped 13.9%, Green Thumb Industries Inc. (GTBIF) moved lower by 10.6%, Cresco Labs Inc. (CRLBF) fell 10.8%, Trulieve Cannabis Corp. (TCNNF) lost 8.1% and Verano Holdings Corp. (VRNOF) dropped 10.7%.
Tilray Brands Inc. $(TLRY)$ dropped 4.6%, Canopy Growth Corp. $(CGC.AU)$ moved lower by 14.9% and OrganiGram Holdings $(OGI)$ fell 5.6%.
TerrAscend Corp. (TSNDF) fell 9% and Ascend Wellness Holdings Inc. (AAWH) dropped 9.1%. Ayr Wellness Inc. (AYRWF) subtracted 16.4%.
Democratic presidential nominee Kamala Harris has voiced support for moving cannabis to Schedule III, which would put it in the same category as anabolic steroids and ketamine. Other Schedule I drugs include heroin and LSD.
Republican nominee Donald Trump has signaled some potential wiggle room on cannabis, although most of his fellow Republicans, including Florida Gov. Ron DeSantis, continue to oppose relaxation of cannabis laws.
"While the rescheduling may not occur ahead of the election, [Vice President] Harris winning the presidential election increases the chances of a final rule being completed in a timely manner," Grey said, adding, "Former President Trump winning the election could pose some risk to rescheduling," depending on who he would appoint as attorney general.
The DEA received 43,000 comments on its proposal, which was initially made on May 21 with a comment period that closed in late July.
The DEA said the comments included requests to hold a public hearing.
DEA Administrator Anne Milgram said she would name a presiding officer and determine who will participate in the hearing, which will take place in Arlington, Va., on Dec. 2 at 9 a.m. Eastern time.
The meeting may be moved to a different location and may be continued from day to day or recessed to a later date without notice, the agency said.
Moving cannabis to Schedule III would allow cannabis companies to take standard business expense tax deductions, potentially saving them millions of dollars.
Also read: Cannabis stocks post sharp gains as Trump says he's starting to 'agree more' about reforms
-Steve Gelsi
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August 27, 2024 10:21 ET (14:21 GMT)
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