Why Are Cannabis Stocks Still Up Today?


  • Cannabis stocks rose as President Joe Biden’s administration moved toward allowing medical marijuana.
  • The DEA is being asked to reclassify marijuana as a Schedule III drug, like ketamine.
  • This would be a huge boon to the industry, which has lost value over the last five years.
Cannabis stocks - Why Are Cannabis Stocks Still Up Today?

Source: Jetacom Autofocus / Shutterstock.com

Stocks that deal in cannabis are rising as the U.S. government moves toward re-classifying marijuana.

The Department of Health and Human Services (HHS) has asked the Drug Enforcement Administration (DEA) to consider moving marijuana from Schedule I to Schedule III. Marijuana is currently classed as a Schedule I drug, like heroin. Schedule III includes drugs like ketamine and anabolic steroids.

Early on Sept. 6, Canopy Growth (NYSE:CGC) stock was up 35% over the past 24 hours. Curaleaf Holdings (OTCMKTS:CURLF) was up 15%. Aurora Cannabis (NYSE:ACB) increased by 8%. Tilray Brands (NASDAQ:TLRY) jumped over 7%, and Cronos Group (NASDAQ:CRON) was up 6%. Exchange-traded funds (ETFs) that hold cannabis stocks also rose.

A Big Catalyst for Cannabis Stocks

A change in view from President Joe Biden is being credited for the latest “marijuana moment.” Vice President Kamala Harris had promised decriminalization during the 2020 campaign, but Biden refused to support the effort. Now, Press Secretary Karine Jean-Pierre says he supports marijuana for medical purposes.

Cannabis is still a long way from becoming legal under U.S. law, although it’s legal in many states.

The DEA will consider the HHS recommendation based on pot’s medical uses, potential for abuse and the extent to which it’s addictive. That report will then go to Attorney General Merrick Garland, who is likely to make a final decision before the 2024 election.

Moving marijuana to Schedule III would provide immediate benefits to cannabis companies. They could write expenses off federal tax returns. The move would also enable interstate commerce and allow for research.

The cannabis industry has lost much of its value since its heyday late in the last decade, when legalization appeared imminent. That was when Philip Morris (NYSE:PM) paid $2.4 billion for a stake in Cronos, and liquor company Constellation Brands (NYSE:STZ) put $4 billion into Canopy Growth. Cronos and Canopy today are each worth less than $1 billion.

Since then, the trend has reversed. Tilray has been buying beer companies, and the industry has been consolidating. In July, however, Philip Morris bought an Israeli marijuana inhaler company.

What Happens Next?

This is a big deal.

A national rule allowing medical marijuana, interstate commerce and legal research would be huge for the industry. But analysts need to listen closely for Republican objections, which could slow the train.

As of this writing, Dana Blankenhorn did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Article printed from InvestorPlace Media, https://investorplace.com/2023/09/why-are-cannabis-stocks-still-up-today/.

©2023 InvestorPlace Media, LLC