Cannabis Stocks Soar
As elections are only one year away, the US government and the Biden administration have proposed numerous measures to alter longstanding public policy. This week’s newest agenda is Cannabis, with the Department of Health and Human Services in negotiations with the Drug Enforcement Agency on loosened control. The hopeful news of deregulation in the heavily scrutinized sector sent investors into a frenzy, with several major cannabis stocks experiencing significant gains. Popular cannabis stocks Canopy Growth, Tilray Brands, and Cronos Group felt surges of 25.8%, 11.3%, and 9.6%, respectively.
The arrangement presented by the Department of Health and Human Services focused on the classification of Marijuana, which as of today is listed as a Schedule I drug. In the early 1970s, the United States created a drug classification scale with five levels, with drugs on Schedule I having no medical benefits and high potential for abuse and those on Schedule V having little potential for abuse and benefits. By 2024, the DEA will now consider moving marijuana to a Schedule III drug, inducing laxer regulations and decreasing the stigma around the drug. This re-scheduling will, however, not change production and sales laws that are active in several states across the country. The most significant benefits for marijuana-focused companies deal with tax and interstate commerce, where producers would be able to file expenses off tax returns and have more access to sales across other state lines. Since its inception, the DEA has not turned down any drug re-scheduling recommendations made by the HHS.
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I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.