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In a significant development, the Department of Health and Human Services (HHS) has recently initiated a review of marijuana's classification under the Controlled Substances Act. This move has the potential to impact the burgeoning marijuana industry, which has faced federal restrictions despite state-level legalization efforts.
Market Reaction: Marijuana Stocks Surge
The news of the potential reclassification had an immediate posiitve impact on marijuana stocks, with companies like Aurora Cannabis, Canopy Growth, and Tilray Brands experiencing notable jumps in their stock prices.
Decades-Long Classification: Marijuana as a Schedule I Drug
Since the 1970s, marijuana has been categorized as a Schedule I drug, alongside substances like heroin and LSD. This classification denotes drugs with no accepted medical use and a high potential for abuse. Despite evolving scientific research and state-level legalization, marijuana has remained in this category, surpassing drugs like fentanyl, cocaine, and methamphetamine.
Proposed Reclassification: Marijuana as a Schedule III Drug
The Drug Enforcement Agency (DEA) will consider reclassifying marijuana as a Schedule III drug, placing it alongside substances like ketamine, anabolic steroids, and testosterone. This classification implies a moderate to low potential for physical or psychological dependence. It's essential to note that this recommendation does not entail complete removal from the controlled substances list. Rescheduling pot will make us significantly more profitable, recently said pot company Verano CEO George Archos, as quoted on CNBC.
Remaining Legal Complexities: Federal vs. State Laws
Even if marijuana is reclassified, federal law would still prohibit cultivation, production, and sales. Currently, marijuana is legal medically in 39 states and recreationally in 23 states, highlighting the ongoing conflict between federal and state regulations.
Path Forward: HHS Evaluation and DEA Decision
The recommendation process involves a scientific and medical evaluation conducted by HHS, which will contribute to the final decision. Analysts anticipate a decision before the 2024 presidential election, considering historical alignment between the DEA and HHS recommendations.
Impact on the Marijuana Industry
If marijuana moves to Schedule III, several key changes are expected:
1. Tax Opportunities:Marijuana businesses currently face restrictions under IRS code 280E, preventing them from deducting expenses on federal tax returns. Reclassification could alleviate this burden.
2. Interstate Commerce:Rescheduling could enable legal interstate commerce, addressing the challenge of transporting marijuana across state lines.
3. Research Expansion:It would open doors for increased research in the marijuana sector, potentially attracting investors and bolstering publicly traded marijuana stocks.
Banking Services Remain Unresolved
While rescheduling could bring relief to the industry, it will not resolve banking issues due to marijuana's federal status. The Secure and Fair Enforcement Banking Act (SAFE) is a bill in Congress aimed at addressing this concern.
Ongoing Push for Federal Legalization
Senate Majority Leader Chuck Schumer and industry executives emphasize that the ultimate goal is ending federal prohibition on marijuana. They argue that federal cannabis reform is long overdue, and efforts to dismantle the War on Drugs continue.
In conclusion, the potential reclassification of marijuana presents both challenges and opportunities for the marijuana industry, with broader implications for federal legalization efforts in the United States.
ETFs in Focus
Against this backdrop, all marijuana ETFs surged in the past two weeks (as of Sep 8, 2023).
AdvisorShares MSOS 2x Daily ETF (MSOX - Free Report) – Up 111.3% Past Month
AdvisorShares Pure US Cannabis ETF (MSOS - Free Report) – Up 48.5% Past Month
Roundhill Cannabis ETF (WEED - Free Report) – Up 45.9% Past Month
AdvisorShares Pure Cannabis ETF (YOLO - Free Report) – Up 35.9% Past Month
Amplify Seymour Cannabis ETF (CNBS - Free Report) – Up 31.1% Past Month
ETFMG U.S. Alternative Harvest ETF (MJUS - Free Report) – Up 28.8% Past Month
(Disclaimer: This article has been written with the assistance of Generative AI. However, the author has reviewed, revised, supplemented, and rewritten parts of this content to ensure its originality and the precision of the incorporated information.)
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Behind the Recent Surge in Marijuana ETFs
In a significant development, the Department of Health and Human Services (HHS) has recently initiated a review of marijuana's classification under the Controlled Substances Act. This move has the potential to impact the burgeoning marijuana industry, which has faced federal restrictions despite state-level legalization efforts.
Market Reaction: Marijuana Stocks Surge
The news of the potential reclassification had an immediate posiitve impact on marijuana stocks, with companies like Aurora Cannabis, Canopy Growth, and Tilray Brands experiencing notable jumps in their stock prices.
Decades-Long Classification: Marijuana as a Schedule I Drug
Since the 1970s, marijuana has been categorized as a Schedule I drug, alongside substances like heroin and LSD. This classification denotes drugs with no accepted medical use and a high potential for abuse. Despite evolving scientific research and state-level legalization, marijuana has remained in this category, surpassing drugs like fentanyl, cocaine, and methamphetamine.
Proposed Reclassification: Marijuana as a Schedule III Drug
The Drug Enforcement Agency (DEA) will consider reclassifying marijuana as a Schedule III drug, placing it alongside substances like ketamine, anabolic steroids, and testosterone. This classification implies a moderate to low potential for physical or psychological dependence. It's essential to note that this recommendation does not entail complete removal from the controlled substances list. Rescheduling pot will make us significantly more profitable, recently said pot company Verano CEO George Archos, as quoted on CNBC.
Remaining Legal Complexities: Federal vs. State Laws
Even if marijuana is reclassified, federal law would still prohibit cultivation, production, and sales. Currently, marijuana is legal medically in 39 states and recreationally in 23 states, highlighting the ongoing conflict between federal and state regulations.
Path Forward: HHS Evaluation and DEA Decision
The recommendation process involves a scientific and medical evaluation conducted by HHS, which will contribute to the final decision. Analysts anticipate a decision before the 2024 presidential election, considering historical alignment between the DEA and HHS recommendations.
Impact on the Marijuana Industry
If marijuana moves to Schedule III, several key changes are expected:
1. Tax Opportunities:Marijuana businesses currently face restrictions under IRS code 280E, preventing them from deducting expenses on federal tax returns. Reclassification could alleviate this burden.
2. Interstate Commerce:Rescheduling could enable legal interstate commerce, addressing the challenge of transporting marijuana across state lines.
3. Research Expansion:It would open doors for increased research in the marijuana sector, potentially attracting investors and bolstering publicly traded marijuana stocks.
Banking Services Remain Unresolved
While rescheduling could bring relief to the industry, it will not resolve banking issues due to marijuana's federal status. The Secure and Fair Enforcement Banking Act (SAFE) is a bill in Congress aimed at addressing this concern.
Ongoing Push for Federal Legalization
Senate Majority Leader Chuck Schumer and industry executives emphasize that the ultimate goal is ending federal prohibition on marijuana. They argue that federal cannabis reform is long overdue, and efforts to dismantle the War on Drugs continue.
In conclusion, the potential reclassification of marijuana presents both challenges and opportunities for the marijuana industry, with broader implications for federal legalization efforts in the United States.
ETFs in Focus
Against this backdrop, all marijuana ETFs surged in the past two weeks (as of Sep 8, 2023).
AdvisorShares MSOS 2x Daily ETF (MSOX - Free Report) – Up 111.3% Past Month
AdvisorShares Pure US Cannabis ETF (MSOS - Free Report) – Up 48.5% Past Month
Roundhill Cannabis ETF (WEED - Free Report) – Up 45.9% Past Month
AdvisorShares Pure Cannabis ETF (YOLO - Free Report) – Up 35.9% Past Month
Amplify Seymour Cannabis ETF (CNBS - Free Report) – Up 31.1% Past Month
ETFMG U.S. Alternative Harvest ETF (MJUS - Free Report) – Up 28.8% Past Month
(Disclaimer: This article has been written with the assistance of Generative AI. However, the author has reviewed, revised, supplemented, and rewritten parts of this content to ensure its originality and the precision of the incorporated information.)