Cannabis investors are thirsty for any good news when it comes to the sector as the battle for federal legality has been plagued by stagnation and very little movement.
So news that the Department of Health and Human services is reportedly recommending that the Drug Enforcement Administration reclassify marijuana at a less severe schedule has publicly traded companies jumping Thursday.
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Tilray (TLRY) -) jumped 13.5%, Canopy Growth (CGC) -) gained 33%, Cronos Group (CRON) -) rose 10% and Aurora Cannabis (ACB) -) rose 7.8% Thursday on the news.
Assistant Secretary for Health Rachel Levine sent a letter to DEA Administrator Anne Milgram asking the agency to downgrade marijuana to a schedule III substance, Bloomberg reported, based on a recent Food and Drug Administration review.
The Biden administration instructed the DHHS to review cannabis' schedule I status – which puts it on the same level of illegality as heroin – in 2022 as the President moves slowly to fulfil a campaign promise to at least decriminalize marijuana use.
While the news is definitely good, just re-scheduling the drug doesn't do much.
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“If marijuana remains a controlled substance under the CSA under any schedule, that would maintain the existing conflict between the federal government and states that have legalized recreational marijuana, though moving marijuana to a less restrictive schedule could help mitigate conflicts between federal law and state medical marijuana laws,” the Congressional Research Service said in a recent report.
Only Congress can de-schedule a drug, the executive branch doesn't have the authority to do that.
Weeks ago Cresco Labs and Columbia Care greed to terminate the $2 billion merger that they agreed to in March 2022. While the companies did not give an exact reason for the breakup, they did hint at what pushed the deal over the edge.
"In light of the evolving landscape in the cannabis industry, we believe the decision to terminate the planned transaction is in the long-term interest of Cresco Labs and our shareholders," Cresco Labs CEO Charles Bachtell said.
That evolving landscape Bachtell mentioned got more rocky for the industry after payment systems processor Mastercard told financial institutions to stop allowing marijuana transactions on its debit cards, Reuters reported, due to the fact that cannabis is still illegal at the federal level.
"The federal government considers cannabis sales illegal, so these purchases are not allowed on our systems," a spokesperson told Reuters.
Under current rules, financial institutions that provide services to legal cannabis businesses face strict regulatory and reporting requirements.
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