Join our daily newsletter At The Bell to receive exclusive market insights
Overnight, the Democratic Biden government did something sure to give their counterparts counterpoints – the USA downgraded the risk profile it gives cannabis.
Cannabis, or marijuana, is now a ‘schedule 3’ drug in the US, which caused a run up in the stock prices of some US cannabis stocks – at least one ETF jumped some 25%.
ASX-listed Little Green Pharma (ASX:LGP) has also released news on the move today – not too long after Germany made weed legal wholemeal.
The US Drugs Enforcement Agency (DEA) will ultimately oversee the changes to America’s justice system where related to cannabis charges.
The implication the market is hearing is – perhaps predictably – that this will translate into less regulation and control over medicinal cannabis products.
That remains to be seen.
LGP did note on Thursday however that the US Department of Health and Human Services had suggested the DEA wind back the intensity of its anti-cannabis stance back in 2023.
It’s also an election year, and the Democrats are scrambling to secure young voters – particularly after arrests being made on-site university campuses in response to anti-Israel protests.
Regardless, it isn’t regulation that LGP is watching – it’s taxes.
“The implications of the proposed rescheduling include the removal of s280E taxes which tax cannabis operators at their gross margin level [instead of] net income,” LGP wrote on Thursday.
“[We also expect] potential momentum for other pro-cannabis legislation at the Federal level and increased institutional interest in US cannabis stocks.”
LGP last traded at 13cps.
