Canopy Growth (NASDAQ:CGC) is looking like a key beneficiary amid rising calls for federal marijuana policy reform. As of this writing, CGC stock has gained more than 10% on Wednesday. For the past five days, shares are up by more than 40%.
Late last week, Vice President Kamala Harris stated that the U.S. Drug Enforcement Administration (DEA) must reconsider its stance on marijuana, calling the current policy “absurd.” In a White House meeting with a group of individuals who received marijuana pardons under President Joe Biden, Harris urged the agency to reschedule cannabis under the Controlled Substances Act.
“I’m sure DEA is working as quickly as possible and will continue to do so, and we look forward to the product of their work,” said Harris.
According to reports, it’s not entirely clear when the DEA began its review of cannabis’ rescheduling. However, the agency confirmed in January that it was conducting such a review.
CGC Stock and Politics Collide
For the Biden administration, cannabis reform seemingly represents a no-brainer issue. According to a Pew Research Center report from November 2022, most U.S. adults believe marijuana should be legal for medical and recreational use. The latest data also suggests that this sentiment has only risen in favor of legalization. So, it’s not surprising that CGC stock is popping higher today.
Moreover, President Biden may have a political motive to push for rescheduling marijuana. According to Politico, he’s hoping that his work on cannabis reform will persuade more young voters to support Democrats in the upcoming election.
In a national survey, Biden holds a “narrow lead” over former President Donald Trump. However, the election could go either way, particularly due to the Biden’s current approval rating. Biden needs a decisive win and cannabis could provide that opportunity.
Nevertheless, not all marijuana reform advocacy groups have a comprehensively favorable opinion about rescheduling efforts. Specifically, rescheduling might not go far enough due to disproportionate enforcement of laws and regulations. One of the key issues is the problematic history of marijuana-related legislation. Rescheduling could also potentially impose bureaucratic red tape around cannabis, thus making for a complex backdrop.
Why It Matters
Despite the rise of CGC stock in recent days, analysts remain pessimistic about Canopy Growth, rating shares as a consensus moderate sell. This assessment breaks down as three holds and two sells on TipRanks. Most significantly, no analyst has issued a buy rating on CGC stock since August.
On the date of publication, Josh Enomoto 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.
