It’s been a while since we’ve heard about cannabis from Washington D.C. Today, however, there’s been a significant development. A top official at the Department of Health and Human Services (HHS) has announced a recommendation to the Drug Enforcement Administration (DEA) for the reclassification of cannabis.
The HHS’ recommendation was to move cannabis from Schedule I of the Controlled Substances Act to Schedule III. Schedule I is a list of drugs that are dangerous, have no medicinal value, and have a high potential for abuse. While nothing will change immediately, the DEA will now have to conduct a review for themselves to determine whether to follow the HHS recommendation. After that, if the DEA follows the recommendation, 280e – which currently applies to only Schedule I and II substances – will no longer apply to cannabis businesses.
Beyond that, it could lead to institutional banking and lending. Perhaps even more with lenders and capital entering the space.
Not entirely unsurprisingly, cannabis stocks have rallied in the wake of the news. Some stocks have even surged 20-30% in a single day. Notable gains were seen in Ayr Wellness (SE: AYR.A), which was up over 29%, Trulieve (CSE: TRUL), which saw an increase of over 25%, Curaleaf (CSE: CURA), which rose almost 20%, and TerrAscend (TSX: TRSD), which witnessed record-breaking volume. In addition to these impressive gains, MSOX also experienced a remarkable boost.
This looks like it’s potentially a big, big win for the Democrats. We discuss how this situation may unfold and examine some of the implications. Just how political will such a change be? Host Shadd Dales, millennial investor Anthony Varrell, and lead financial writer Benjamin A. Smith have some speculations.
During a recent Twitter Space session held on the handle @thedalesreport, we had a thought-provoking discussion with Jason Wild, TerrAscend Chairman, about whether this recommendation brings us closer to the rescheduling of cannabis. Mr. Wild believes that this is indeed the case. Be sure to catch the discussion, and like and subscribe to keep up with the latest news.