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Cannabis might finally be seeing changes at the regulatory level in the United States. And it’s already sending shockwaves through the public markets.
What’s happening:
- The United States Drug Enforcement Agency is poised to make landmark decision to reclassify cannabis from a Schedule I drug to a Schedule III drug
- The new decision comes after the Federal Health and Human Services Department put out an official recommendation to reclassify cannabis due to its medical and therapeutic potential and its relatively high safety profile
Why it matters:
- Cannabis is currently a Schedule I drug in the United States, which puts it alongside drugs such as heroin and has largely prevented cannabis companies from institutional capital and even access to banking
- Decriminalization on the federal level has been the longest awaited catalyst for cannabis in the United States, as currently cannabis has only been legalized on a state by state basis
Market reaction:
- Shares of Canopy Growth (NASDAQ: CGC) soared 78% on the announcement
- Shares of Aurora Cannabis (NASDAQ: ACB) were up 46%
- Shares of Trulieve Cannabis (CSE: TRUL) were up 35%
Going deeper:
- Policymakers in Germany also recently decriminalized cannabis, which has sparked momentum for licensed cannabis producers in Europe
The fine print:
- While the Drug Enforcement Agency in the United States may reclassify cannabis to a Schedule III drug, that will not make cannabis outright legal on the federal level yet
