Pot stocks jump as federal agency reportedly seeks to downgrade cannabis from the hard-drug category
REUTERS/Hannah Beier
- The Drug Enforcement Agency received an official recommendation to downgrade marijuana.
- Currently, pot is classified as a Schedule I drug, on par with heroin.
- The news sparked a rally in related stocks, with the largest pot ETF climbing nearly 19%
A recommendation by US drug officials to lower restrictions on marijuana boosted cannabis-linked stocks by up to 10% on Wednesday.
According to Bloomberg, an official from the Department of Health and Human Services has called for cannabis to be reclassified as a Schedule III drug in a Tuesday letter addressed to Drug Enforcement Agency Administrator Anne Milgram.
Under the Controlled Substance Act, marijuana is currently considered a Schedule I substance, on par with hard drugs like heroin — these are considered to be drugs with a high potential for abuse. Schedule II drugs included cocaine and fenantyl.
Though medical marijuana has been legal in many states for years, Substance I drugs have no accepted medical use under DEA regulation. Marijuana's category downgrade would be a serious shift for the cannabis industry, easing restrictions on its use.
According to the Bloomberg article, the DEA confirmed that it had received the recommendation and signaled that it would launch its own review to decide on the reclassification.
The report sparked a rally in cannabis-linked shares late in Wednesday's trading session.
The largest marijuana exchange traded fund, the AdvisorShares Pure US Cannabis ETF, gained around 19%. It was outpaced by the Roundhill Cannabis ETF, at 20%.
Among individual stocks, the pharmaceutical research firm Tilray rose 10%, with Canopy climbing the same amount. Meanwhile, Cronos climbed 6.61%, Aurora Cannabis reached 6.79%, and SNDL gained 7.14%.
Weed stocks have enjoyed highs earlier this year on bouts of good news, most recently rallying in April amid a bipartisan effort to pass a law shielding financial institutions from financing the marijuana industry.