Cannabis stocks advanced sharply to start the week, after the nation’s leading health agency recommended sweeping changes to federal marijuana laws. Still, it’s up in the air whether the proposed changes will ultimately help cannabis companies and investors any time soon — if at all.
Below, I’ll share key investor pros and cons in the major reform proposal rolled out on Jan. 12 by the Department of Health and Human Services (HHS).
Stock traders should take note that there’s a potentially huge and tradable catalyst on the way soon. But first, given the polarizing nature of cannabis culturally and politically, let’s acknowledge the remarkable nature of the 252-page HHS proposal, especially for anyone familiar with the U.S.’s “war on drugs.”
The HHS asked the Drug Enforcement Agency (DEA) to soften its stance on cannabis by downgrading it to Schedule III from Schedule I under the Nixon-era Controlled Substances Act. The change would help cannabis companies by boosting cash flow enormously.
To make a credible recommendation, HHS had to find that cannabis has acceptable medical uses and a relatively low potential for abuse and dependence. HHS built its case by citing extensive research and the now-widespread doctor-recommended usage across the country. This new policy proposal would represent a sea change for the federal government.
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