Cannabis Shares Decline After DEA Postpones Reclassification Hearing

(Reuters) – Shares of cannabis companies sank on Tuesday after the U.S. Drug Enforcement Administration (DEA) postponed its cannabis reclassification hearing to Dec. 2, following the U.S. presidential election.

The Department of Justice, overseeing the DEA, stated that Attorney General Merrick Garland recommended reclassifying cannabis as a Schedule three drug instead of Schedule one earlier this year. Schedule one is reserved for substances with a high potential for abuse and no accepted medical use.

Shares of Curaleaf and U.S.-listed Canopy Growth (NASDAQ:CGC) fell over 10%, while Illinois-based Verano Holdings dropped 12.9%.

The AdvisorShares Pure US Cannabis ETF decreased by 9.1%, having earlier fallen as much as 12% during the session.

Canada-listed Green Thumb Industries (OTC:GTBIF), Tilray (NASDAQ:TLRY) Brands, and Trulieve Cannabis (OTC:TCNNF) were down 8.6%, 6%, and 5% respectively.

Analysts at TD Cowen remarked, “We believe both candidates are likely to let rescheduling advance, though we have more confidence in Kamala Harris than in Donald Trump.”

They also noted that the outcome would significantly depend on Trump’s choice for key positions, including Attorney General, the director of the DEA, and the Secretary of Health and Human Services, should he win.

The HHS’ National Survey on Drug Use and Health for 2023 indicated that marijuana is the most commonly used illicit drug, with 21.8% of individuals aged 12 or older, or 61.8 million people, reporting usage.

Reclassifying marijuana would represent a first step toward narrowing the wide policy gap between state and federal cannabis laws. Medical cannabis is legal in 38 states and several U.S. territories, while recreational use is permitted in 24 states and Washington, D.C.; however, it remains federally illegal.

Until such changes, “the extended wait for rescheduling decisions could maintain the status quo, leaving businesses to navigate a patchwork of state regulations and ongoing federal ambiguity,” said Pete Sahani, CEO of cannabis hardware firm The Blinc Group.