Marijuana Reclassification Bid Sends Cannabis Stocks Soaring
Cannabis Stocks Surge on DOJ's Proposal to Reclassify Marijuana.
The Department of Justice’s push to reclassify marijuana as a Schedule III drug Thursday provided an immediate jolt on Wall Street for a group of publicly traded cannabis companies, as the Biden administration moves to drastically expand the availability of medical marijuana.
KEY FACTS
Shares of Canopy Growth Corp., the biggest marijuana company by market cap, closed at roughly $11, an increase of over 11% on the day to a one-month high on the heels of the DOJ’s announcement.
Canadian cannabis producer Aurora Cannabis’ stock spiked nearly 7%, closing Thursday at almost $8 per share, another one-month high.
Cannabis product manufacturer Green Thumb Industries’ stock rose nearly 3%, climbing to a high of just over $13.
Shares of Trulieve Cannabis Corp similarly spiked, surging nearly 6% on the day to just under $13 per share, while cannabis pharmaceutical company Tilray Brands’ shares increased by roughly 2.5% to just over $2 per share.
Shares of Cronos Group also jumped over 4% on Thursday, closing at over $3 per share.
NEWS PEG
The Department of Justice filed a proposed rule that would officially reclassify marijuana as a Schedule III drug, following over 50 years as a Schedule I drug, which placed it on the same level as heroin, ecstasy and LSD. If given final approval by the Drug Enforcement Agency, the move would allow the federal government to regulate medical marijuana—which is already legal in most states to varying degrees—and pave the way for further studies into its use, though it would not decriminalize marijuana.
KEY BACKGROUND
The DEA has also signaled its support for rescheduling marijuana in its third-tier of drugs—along with Tylenol, codeine and ketamine—following a push by President Joe Biden in 2022 for the Department of Health and Human Services to “expeditiously” review a reclassification. In its review published last August, the department found there are some medical benefits of marijuana, sending its recommendation to the DEA. Reclassification has been a major policy point for Biden ahead of the 2024 election, and it’s been something most Americans support.
Roughly three in five U.S. adults in a Pew Research Center poll conducted in March said they support legalization for medical and recreational purposes, compared to roughly 10% who say it should not be legal for either use. Critics argue reclassification could present side-effects to users and make marijuana more accessible, potentially providing Americans with a gateway drug to other more harmful alternatives—though studies have raised significant doubt about that concern.
