Cannabis Industry Experiences a High as Biden Administration Ponders Easing Restrictions
It appears that the cannabis industry’s dreams, which were on the verge of going up in smoke due to the U.S. government’s classification of marijuana as a dangerously addictive drug, might get a new lease on life. With the Biden administration contemplating the easing of federal restrictions on marijuana, shares in cannabis-related companies have been soaring. Despite this, industry insiders warn that they don’t anticipate significant changes immediately.
Justice Department Considers Reclassifying Marijuana
The Justice Department, on Tuesday, recommended a change in marijuana’s classification from a Schedule I drug (highly addictive with no medicinal use) to a Schedule III one, which is considered less addictive and often has medicinal uses. Despite this, the department could still prosecute offenders, although it has stated that this is not a high priority.
Cannabis Stocks Soar on News of Potential Reclassification
Following the news from the Justice Department, shares in Tilray, a giant in the cannabis industry, jumped 39 percent. Shares in Canopy Growth also saw a significant leap of nearly 79 percent. This is a much-needed relief for investors in both companies, as Canopy Growth’s stock had plummeted by 97 percent over the last five years, and Tilray’s had dropped by 95 percent.
Potential Impact of New Rules on Cannabis Industry
With the potential reclassification of marijuana, the cannabis industry could benefit from tax breaks that are currently not available for businesses that deal in Schedule I or Schedule II substances. This could lead to lower prices and increased hiring. It may also encourage investment, with sidelined capital expected to enter the market as the potential for legal businesses to thrive increases.
Financial Giants May Start Working with Cannabis Companies
Another significant change would be the potential involvement of financial giants with cannabis companies. Service providers, such as Mastercard and brokerages, have previously shied away from transactions involving federally prohibited substances. Their re-entry would be a significant boon for companies in the cannabis industry.
Years of Decision-Making Culminates in Potential Policy Change
This decision is the culmination of years of debate. President Biden ran for office in 2020 with the pledge to decriminalize marijuana and ease convictions related to its use. However, the move has not been devoid of controversy, with figures such as Anne Milgram, the Drug Enforcement Administration’s administrator, raising concerns.
Cannabis Industry Challenges Existing Federal Laws
The cannabis industry has not been passive in the face of federal laws either. A group of companies has sued the Justice Department, arguing that the federal government was overstepping its constitutional authority over interstate commerce by restricting companies that operate entirely within states.
Final Changes Will Not Be Immediate
Despite the promise of change, industry insiders caution that the shifts will not be immediate. The Justice Department’s recommendation sets off a lengthy rule-making process, including a public comment period. As such, the final changes are still far off.
