Major public cannabis operators just watched their shares take a plunge after the DEA pushed back its rescheduling hearing until after the nation’s presidential election in November.
Earlier this year, multiple sources reported that the DEA was planning to reschedule pot from a Schedule I substance to a Schedule III in the immediate future.
This move to amend the country’s Controlled Substances Act would have broad implications for the industry. American cannabis operators would reap significant tax benefits and the plant would be considered no more dangerous than anti-depressants.
Attorney General Merrick Garland was the government official who circulated the reclassification proposal earlier this year. He is the nation’s top law enforcement authority. Although the change is imminent in the United States, the federal agency now won’t be hosting a formal meeting on the matter until Dec. 2.
A final stamp of approval will likely not be made until next year.
Shares of American pot producers like Verano Holdings Corp (OTCMKTS: VRNOF) and Curaleaf Holdings Inc (TSE: CURA) (OTCMKTS: CURLF) fell by over 10 per cent following the news. Meanwhile, the AdvisorShares Pure US Cannabis ETF (NYSEARCA: MSOS) slid by over 13 per cent.
Other operators like Tilray Brands Inc (TSX: TLRY) (OTCMKTS: TLRY), Trulieve Cannabis Corp (OTCMKTS: TCNNF) and Green Thumb Industries Inc (CNSX: GTII) (OTCMKTS: GTBIF) felt the impact too. Their shares all dipped by 5 per cent or more.
📣 JUST IN: Cannabis Stocks Plummet as DEA Postpones Reclassification Hearing to December $TLRY $SNDL $OGI $ACB $CRON $CURLF $CGC $MSOS
👉 Key Highlights:
📍 U.S. DEA postpones cannabis reclassification hearing to Dec. 2, post-U.S. presidential election.
📍 Attorney General… pic.twitter.com/Mz1IEPhXno
— Hardik Shah (@AIStockSavvy) August 27, 2024
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Data shows widespread support for legalization
A nationwide poll completed earlier this year by Virginia’s market researcher The Tarrance Group found that 57 per cent of Americans supported federal legalization.
In addition, more recent polls completed by the same market analyst in Pennsylvania, Michigan and Wisconsin found that there was widespread support for rescheduling and cannabis banking access, as well as nationwide legalization.
More than 79 per cent of voters in these three states support medical legalization while over 58 per cent support the authorization of recreational herb.
“Regardless of party affiliation, voter support for marijuana reform is as strong as ever,” Brian Herrington, a lawyer involved with the research, said. “Candidates have an opportunity to align with voter preferences by ending prohibition with responsible regulation, giving legal cannabis businesses access to commercial banks and categorizing cannabis as a low-risk drug.”
Medical cannabis is currently legal in 38 states while adult-use is permitted in 24.
“We believe both candidates are likely to let rescheduling advance, though we have more confidence in Kamala Harris than in Donald Trump,” TD Cowen analysts noted.
rowan@mugglehead.com
