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Corporate cannabis, small business owners, and advocates alike had a lot to say on Tuesday, after the U.S. Drug Enforcement Administration confirmed it will put forth a proposal to reschedule cannabis from its current Schedule I classification to Schedule III under the Controlled Substances Act.
The proposed rule, which would recognize cannabis as having a lower potential for abuse compared to its current status, will have to first undergo a review by the White House Office of Management and Budget and then a public comment period before the DEA ultimately publishes out a final rule.
Still, while the process could end up playing out in arduous fashion, as it often does in the government, folks are just glad the feds are making moves.
Market booms in response
Cannabis stocks regained some steam on Tuesday following the news. Both the AdvisorShares Pure US Cannabis ETF and Amplify U.S. Alternative Harvest ETF rose by more than 20% in afternoon trading.
Individual cannabis stocks with smaller market caps and corporate giants alike also posted big gains. New York-based multistate operator Curaleaf Holdings climbed 21% to reach a new 52-week high, and Florida-based Trulieve Cannabis surged nearly 40% by the close.
Interest in the sector has been waning, noted Morgan Paxhia, managing director of Poseidon Investment Management. But this move could reinvigorate it.
“Pessimism and skepticism is plentiful as many have written off the sector focusing on the wrong things like low quality/speculative companies or non-catalysts like SAFER Banking,” he said. “Rescheduling is likely to bring a vibrant return of investor interest that could quickly move the sector back to robust optimism.”
Is it enough?
But not everyone was as enthusiastic as the stock market on Tuesday. For some, the move falls significantly short.
“This is a positive step forward for federal cannabis policy, however it is a rather modest step given the strong support among American voters for comprehensive cannabis reform,” said Matthew Schweich, executive director of the Marijuana Policy Project.
Rescheduling doesn’t eliminate the “criminalization of medical cannabis patients and cannabis consumers under state laws,” he said. So work still remains to move the industry forward.
That sentiment was echoed by Gretchen Gailey, co-founder of the American Cannabis Collective: “While this move is undoubtedly a huge win for patients, we must not lose sight of the broader context. Moving cannabis to Schedule III does not mark the end of prohibition. We caution against any attempts to overstate the significance of this decision.”
However, most people agree that once the final rule is published, plant-touching businesses will see immediate results for their bottom lines, and the industry will have more opportunities for growth.
“Reclassifying cannabis from a Schedule I to a Schedule III means so much for our dispensary and New Jersey,” said Alyza Brevard Rodriguez, owner of The Other Side Dispensary in Jersey City.
“It’s not only the potential tax benefits and financial relief through write-offs, especially during the crucial early years of opening a business, but it also opens doors for more research opportunities, reducing stigmatization, and legitimizing the industry further.”
This article originally ran in Green Market Report.
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Adam Jackson, Green Market Report , 2024-05-01 21:40:15
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