By Steve Gelsi
Canopy Growth is up 49% in the past week, while Verano is up 18% during the same period
Cannabis stocks cooled off Thursday but held onto big gains from the past week on the heels of positive comments from the Biden administration on reclassifying cannabis from a Schedule I controlled substance under federal law.
President Joe Biden ignited buying in the sector on March 8 after he mentioned cannabis in his State of the Union speech, referencing an effort to change the current federal classification of marijuana. It is currently a Schedule I drug, like heroin and LSD – a more restrictive classification than that of fentanyl, which is a Schedule II drug.
Also read: Cannabis stocks rise after President Biden mentions plant in State of the Union speech
This was followed up by Vice President Kamala Harris saying in a meeting at the White House Friday that Schedule I classification for marijuana is “absurd” and that the plant should be rescheduled “as soon as possible.”
The broad market has been in rally mode as well, creating more tailwinds for cannabis stocks.
The AdvisorShares Pure U.S. Cannabis exchange-traded fund MSOS moved down by 1.3% on Thursday, but it remains up by 14.8% in the past week.
Canopy Growth Corp.’s stock (CGC) fell 1.8% on Thursday morning but held onto a gain of 49% in the past week. While its business is currently in Canada, the company is planning to close acquisitions of three U.S. cannabis businesses under a plan to create a Canopy USA unit.
Canada’s Aurora Cannabis Inc. (ACB) dropped 3.7% on Thursday, but the stock is still up by 24.6% in the past week.
Tilray Brands Inc. (TLRY), another Canadian producer, dropped by 2.3% on Thursday but has gained16% in the past week. The company, which sells beer and other alcoholic beverages in the U.S., has said it’s taking aim at the U.S. market for cannabis products in the future.
Curaleaf Holdings Inc. (CURLF) fell 1.2% on Thursday but has risen 20% in the past week, while Trulieve Cannabis Corp. (TCNNF) is lower by 0.3% but has risen 14% in the past week.
Cresco Labs Inc. (CRLBF) is down 1% on Thursday after rising 14% in the past week. Verano Holdings Corp. (VRNOF) is down by 1.8% on Thursday after gaining 17.9% in the past week. Green Thumb Industries Inc. (GTBIF) dipped 0.8% on Thursday but is up by 13% in the past week.
The U.S. Department of Health and Human Services last summer recommended cannabis for Schedule III status, which would allow for medical use of pot under federal regulations. The Drug Enforcement Administration is currently studying the recommendation but has not issued any timeline on its decision. Speculation has risen that the DEA could make its ruling in the coming weeks.
Also read: HHS recommends rescheduling cannabis, and stocks in the sector rally
Cannabis companies have said they expect the change to Schedule III to eliminate the need to follow a tax law called 280E that prevents them from taking standard business tax deductions.
Curaleaf has said that elimination of 280E restrictions would save it $150 million annually.
Also read: Cresco Labs’ stock rallies as cannabis company swings to a profit
-Steve Gelsi
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03-21-24 1046ET
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