Cannabis rescheduling comment period ends with nearly 43,000 submissions

By Steve Gelsi

Cannabis stocks rose Tuesday on top of larger advances in the previous session as the government window closed for public feedback on proposed changes.

Cannabis stocks moved up for the second straight day Tuesday after the public feedback period for reducing the classification of cannabis to a less dangerous U.S. ranking ended with nearly 43,000 comments.

The Drug Enforcement Administration has proposed a Schedule III classification for cannabis, down from its listing on Schedule I of the federal Controlled Substances Act.

Cannabis stocks on Monday posted big gains as the 11:59 pm ET deadline loomed for comments on the rescheduling, which would place cannabis in the same regulatory bucket as ketamine and anabolic steroids.

The move could save legal cannabis companies millions in taxes because they'll no longer be required to follow section 280E prohibitions from making standard business tax deductions.

Schedule III drugs are defined under federal law as drugs with a moderate to low potential for physical and psychological dependence.

Since 1970, cannabis has been a Schedule I substance, which means it has no medical use and in the same bucket as heroin and LSD.

A spokesperson from the Drug Enforcement Administration declined to comment on how the roughly 43,000 comments ranks in terms of feedback on any drug scheduling issues in the past. The spokesperson did not provide a timeline for the final ruling on pot's proposed reclassification.

Among the comments on the proposed change was a study by Whitney Economics for the Minority Cannabis Business Association that concluded that 33.7% of white cannabis business operators reported being profitable, while only 17.5% operators of color managed to do so.

The group argued that ending the 280E tax penalty through re-scheduling is a "desperately-needed change and will disproportionately benefit social equity operators of color."

On the other hand, Smart Approaches to Marijuana has vowed to challenge the rescheduling effort in court, saying that marijuana is a "psychoactive drug known to come with serious health and mental-health consequences."

Monday also marked the first stock-trading day after Vice President Kamala Harris emerged as the likely Democratic nominee for president instead of Joe Biden.

Harris has been on board with President Joe Biden's move to reclassify cannabis and hosted a meeting with cannabis industry members at the White House earlier this year.

The AdvisorShares Pure US Cannabis ETF MSOS rose 0.5% on Tuesday, on top of a rise of nearly 6% in the previous session

Curaleaf Holdings Inc. (CURLF) advanced 0.9%, on top of a 3% gain on Monday,

Trulieve Cannabis Corp (TCNNF) rose 0.4%, a day after it jumped nearly 4%.

Green Thumb Industries (GTBIF) edged up by 0.1%, after moving up by 4% in the previous session.

Cresco Labs (CRLBF) rose 0.9% on top of a 6.4% rally on Monday.

Verano Holdings Corp (VRNOF) jumped 3.8% on Tuesday after rising 5.3% on Monday.

Tilray Brands Inc. (TLRY) rose 0.5% after rising by 7.3% on Monday.

Canopy Growth Corp. (CGC) rose 1.3% after a big rally of 17% in the previous session.

-Steve Gelsi

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07-23-24 1455ET

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