NEW YORK – Shares of publicly traded cannabis companies felt investors’ dissatisfaction following the Drug Enforcement Administration’s (DEA) announcement it will hold a public hearing about rescheduling December 2.
The day after Monday’s announcement, Verano Holdings (OTCMKTS: VRNOF) shares fell nearly 13 percent, marking the largest slide by a single company. Curaleaf (OTCMKTS: CURLF) and Canopy Growth (NASDAQ: CGC) also took a beating, falling more than 10 percent. Green Thumb Industries (OTCMKTS: GTBIF), Tilray (NASDAQ: TLRY), and Trulieve (OTCMKTS: TCNNF) slid by nearly 9 percent, 6 percent, and 5 percent respectively.
AdvisorShares Pure US Cannabis ETF (NYSEARCA: MSOS), the largest exchange-traded fund of its kind by total assets, fell nearly 10 percent on Tuesday, closing at $6.10 per share. The ETF reached its 52-week high of $11.36 per share in late April, but performance has dwindled since its post-420 bump.
Some stocks rallied slightly on Thursday, with Curaleaf up 4.36 percent, Tilray rising .59 percent, and Green Thumb up .16 percent at the close of trading. Others, however, continued to slide. Canopy Growth lost another 2.08 percent, Verano slid .62 percent, and Trulieve slipped .42 percent.
AdvisorShares rose 1.65 percent on Thursday.
NORML Deputy Director Paul Armentano chided the markets and the industry for letting what he called “wishful thinking” convince them rescheduling was imminent. The process was set in motion in October 2022, when President Joe Biden requested the Department of Justice and the Department of Health and Human Services consider reclassifying the plant. The DEA, which bears ultimate responsibility for classification under the Controlled Substances Act, did not confirm a proposal to move cannabis from highly restrictive Schedule I to Schedule III until January 2024. Then another five months passed before the DEA posted a call for public comments. Hearings are just another step in an intricate, and somewhat glacial, federal dance, Armentano indicated.
“Hearings are an integral part of the rescheduling process,” he said. “To think the DEA, which historically has opposed any changes to cannabis’s prohibitive status, would sign off on the most significant proposed change in federal marijuana policy in over fifty years absent such hearings was always wishful thinking.”
Most recently, the DEA denied two rescheduling petitions in 2016.
Despite the market’s knee-jerk reaction to the hearing announcement, retiring Rep. Earl Blumenauer (D-OR), a staunch reform proponent, said he still has “every reason to believe” rescheduling will happen before Biden’s term ends in January 2025.
According to data firm Headset, a review of comments provided during the rescheduling proposal’s public comment period reveals more than 90 percent favored the proposal. Nevertheless, it’s unclear whether the DEA’s delay places the fate of rescheduling in the hands of the next U.S. president.
“We believe both candidates are likely to let rescheduling advance, though we have more confidence in Kamala Harris than Donald Trump,” analysts at securities brokerage TD Cowen stated in a note sent to members Tuesday morning.
Democratic nominee Harris publicly supports rescheduling and other reform efforts. Republican nominee Trump has not committed to supporting cannabis reform, although according to The Cannabis Business Advisors Chief Executive Officer Sara Gullickson, “inside sources have indicated” the former president may be amenable to maintaining the state-by-state status quo.
In any case, there’s not much the industry — or the stock market — can do besides wait and watch.
“While we all hoped a hearing wouldn’t take place, it’s just another obstacle we’ll have to get through,” said Story Cannabis founder and Chief Executive Officer Jason Vedadi. “Regardless of the outcome, we have to continue pushing forward as an industry. I know we’re all tired from the many regulatory ups and downs we’ve faced, but the only option right now is to take a deep breath and see where the chips fall.”
