https://apnews.com/article/marijuana-biden-dea-criminal-justice-pot-f833a8dae6ceb31a8658a5d65832a3b8
The U.S. Drug Enforcement Administration will move to reclassify marijuana as a less dangerous drug, The Associated Press has learned, a historic shift to generations of American drug policy that could have wide ripple effects across the country.
In October 2022, Biden tasked the AG and HHS to review cannabis' schedule on the controlled substances act. It has been long speculated that the intention of the Biden administration has been to reschedule cannabis shortly before the 2024 election.
Following this directive, HHS formally recommended cannabis to be rescheduled from 1 to 3 around 8 months ago. Since then, there's been speculation on if the DEA will follow through on the recommendation and the timing surrounding the decision. Well today we received confirmation that the DEA will reschedule cannabis to 3 following HHS' recommendation. This marks the most significant federal cannabis reform in over 50 years.
This rescheduling will have a tremendous impact on the US cannabis companies which currently face regulatory hurdles that are unheard of in other sectors. These companies are paying 70-80% tax rates as they are unable to deduct normal business expenses due to 280E, which only applies to schedule 1 and 2 substances. Schedule 3 would eliminate this tax burden and make many of these companies profitable overnight. It would also remove hurdles in terms of access to the federal banking system and would ultimately allow these companies to uplist to the major US exchanges such as the NASDAQ and NYSE. Currently these stocks trade on the CSE, a small Canadian stock exchange that is heavily manipulated and illiquid.
$MSOS, the main US-only cannabis stock ETF, is up over 20% today on this news. I also hold various US cannabis operators directly including $GTBIF, $TCNNF, $CURLF, $VRNOF and $CRLBF
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