Pot firms gain as US move to ease curbs lifts sentiment

Green Thumb Industries

31/08/2023 14:24

Aug 31 (Reuters) - U.S.-listed shares of marijuana
companies rose up to 7% in premarket trading on Thursday after
the Department of Health and Human Services recommended
reclassification as a lower-risk substance following an 11-month
review.
    Marijuana remains illegal at the federal level even as
nearly 40 U.S. states have legalized its use in some form, and
the reclassification is seen as the first step toward wider
legalization that has the support of a majority of Americans.
    "Certainly moving cannabis off of Schedule 1 is the right
decision and long overdue. Though a full descheduling would be
preferred and likely most appropriate for cannabis," said       
 Patrick Rea, managing director of venture capital firm Poseidon
Garden Ventures. 
    The firm held investments in companies like retailer and
producer Green Thumb Industries  GTII.CD , and cannabis data
platform Flowhub, according to its website.
    Shares of cannabis firms SNDL  SNDL.O , OrganiGram Holdings
 OGI.TO   OGI.0 , Tilray Brands  TLRY.O , Cronos Group  CRON.TO 
 CRON.O , Canopy Growth  WEED.TO   CGC.O  and Aurora Cannabis
 ACB.TO   ACB.O  rose between 1.2% and 7%.
    Pot stocks tracker AdvisorShares Pure US Cannabis ETF
 MSOS.K  gained 3.7% premarket. It closed 21.2% higher on
Wednesday, clocking its best day since Oct. 6, 2022.
    The recommendation was provided to the Drug Enforcement
Agency who has the final authority on rescheduling and will now
initiate its own review.
    Still, some analysts said the rescheduling would not be able
to address the banking or capital market access challenges for
cannabis companies.
    The SAFE Banking Act, a crucial legislation that would make
it easier for the cannabis industry to access banking services,
has failed to secure a Senate vote despite the House passing it
seven times.
    "The main issue the industry will face revolves around the
crucial fact that over the last two decades, dozens of states
have developed their own cannabis laws (medical or recreational)
in the absence of cohesive federal regulation. And rescheduling
to Schedule III would not solve this mismatch," Bernstein
analyst Nadine Sarwat said.    
    

 (Reporting by Arunima Kumar in Bengaluru; Editing by Sriraj
Kalluvila)
 ((Arunima.Kumar@thomsonreuters.com; Twitter: https://twitter.com/Aru_Kumar94
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