News that the US Drug Enforcement Administration (DEA) is set to host a public administrative hearing on cannabis rescheduling has immediately impacted cannabis stocks.
Yesterday, Business of Cannabis reported that the hearing, which will further examine the 40,000+ public comments the DEA has received since it officially issued to proposals, would take place on December 02.
This not only quashed hopes that rescheduling could be pushed through ahead of the November presidential election, potentially delaying the process for months, but it has also placed even greater significance on the outcome of the next election.
Despite the Harris/Walz ticket representing the first openly pro-cannabis reform presidential pairing in US history, former president Trump’s relatively ambiguous stance on rescheduling has caused uncertainty in the market and anxiety among investors.
Yesterday, North American cannabis stocks tumbled, with New Cannabis Venture’s American Cannabis Operator Index, which tracks the stock price of the 12 largest US cannabis operators, falling by nearly 13%.
Shares in Ayr Wellness, Verano Holdings, Cresco Labs, Ascend Wellness, TerrAscend and Canopy Growth all fell by double digits yesterday, while AdvisorShares Pure US Cannabis ETF fell 10.3%, and the Amplify Alternative Harvest ETF declined by 6.3%.
Sentiment was mixed among the industry, with some suggesting it is simply another roadblock, but others raising concerns about the DEA’s views on rescheduling.
Jason Vedadi, CEO and founder of Story Cannabis, said: “While we all hoped that a hearing wouldn’t take place, it’s just another roadblock that we’ll have to get through. Regardless of the outcome, we have to continue pushing forward as an industry. I know we’re all tired from the many regulatory ups and downs we’ve faced, but the only option right now is to take a deep breath and see where the chips fall.”
Breaking news: The DEA hates weed.
Milgram & her team are against marijuana bc it threatens their job & the @DEAHQ budget.
Defund the DEA. They caused the opioid epidemic. Time for change.#Punkd#TaxesMatter #SmokeMoreWeed $GTBIF $MSOS
https://t.co/atwjSKknvi
— Ben Kovler (@Bkov9) August 27, 2024
Meanwhile, the wider potential impacts of rescheduling were also being put under significant scrutiny, further dampening sentiment among investors.
A new report from the Congressional Research Service (CRS) suggests that rescheduling is unlikely to significantly improve banking access for state-legal cannabis businesses.
Without federal legalization, the report emphasizes, many financial institutions might still avoid serving the industry due to concerns about violating federal anti-money laundering laws.
While a Schedule III classification would allow cannabis businesses to take federal tax deductions currently barred by IRS code 280E, it wouldn’t eliminate the legal risks banks face.
The post Rescheduling Delay Sends Cannabis Stocks Into Tailspin appeared first on Business of Cannabis.
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