Marijuana-related companies’ shares surged following the U.S. Drug Enforcement Administration’s historic reclassification of marijuana into a less dangerous drug category.
Tilray Brands Inc. and Canopy Growth Corp. Gains
- Tilray Brands Inc. grew 40%.
- Canopy Growth Corp. gained 79%.
- MJ PurePlay 100 Index rose 22%.
- AdvisorShares Pure U.S. Cannabis ETF surged 25%.
DEA’s Reclassification of Marijuana
- DEA is reviewing marijuana classification since September.
- Reclassification would remove additional taxes for cannabis companies.
- Dan Ahrens, Advisorshares Investments LLC managing director, confirms official move.
- Potential domino effect could occur.
- Facilitates easier House and Senate action on SAFER Banking.
Cannabis Industry Stocks Rise
- SAFER Banking Act aims to increase accessibility to banking and financial services.
- Cannabis industry stocks outperformed S&P 500 Index due to investor anticipation of DEA action.
- Pot stocks trade at steep discounts to previous highs.
Jefferies’s report on Cannabis Industry
- Reclassification could boost cash flow by removing extra taxes for cannabis companies.
- Potential to attract institutional investment due to lack of institutional ownership.
- Potential to prompt more US states to legalize marijuana, destigmatize use, and facilitate substance study.
Cannabis Legalization in the US
- Potential for full federal legalization within 5 years.
- Aids in studying cannabis, filling data gaps on widespread use.
- Final decision from DEA uncertain.
- Rule could be published this week, with scheduling announcement expected in the coming months.
- Rescheduling would be significant federal reform and the most incremental policy change regarding cannabis in a century.