Fans of Canopy Growth (NASDAQ:CGC) stock have plenty to look forward to following a recent proposal to reschedule cannabis. This, of course, includes its upcoming first-quarter earnings report, due on May 30.
The entire cannabis industry has been on cloud nine of late following the U.S. Department of Justice’s (DOJ) historic proposal to move forward with the re-classification of cannabis. Indeed, on Thursday, May 16, the DOJ released a proposal to reclassify the green plant from a Schedule I drug to a Schedule III drug.
“No safety concerns were identified in the FDA’s review that would indicate that medical use of marijuana poses unacceptably high safety risks,” the DOJ wrote in the proposal.
This difference is substantial. Schedule I drugs are considered to have virtually no health benefits and are highly addictive. Other drugs in this class include heroin and LSD. Meanwhile, Schedule III drugs reflect a low-to-moderate potential for dependence, with some medicinal uses to boot.
For cannabis growers, the change comes with some substantial potential benefits. Indeed, as a Schedule I drug, marijuana growers and sellers faced steep taxes and regulation that may ease in the face of the progressive legislation.
This development will also help close the gap between federal and state cannabis laws. Cannabis is already legal in 40 states in the U.S., despite federal law on the matter being relatively unchanged for the past 50 years.
The rescheduling has been a long time coming. President Joe Biden’s administration began the reclassification process in October 2022, following a Department of Health and Human Services recommendation.
As you might imagine, cannabis stocks have been lifted across the board on the news.
CGC Stock Soars on Rescheduling Proposal
CGC stock jumped 20% Thursday afternoon following the news from the DOJ and has continued to climb Friday, currently up about 1% as of this writing.
Not alone, fellow cannabis stocks Tilray Brands (NASDAQ:TLRY) and Aurora Cannabis (NASDAQ:ACB) each enjoyed strong gains on the news. Though, unlike CGC stock, both of these names have simmered back down today, returning some of yesterday’s gains.
Canopy Growth is up a staggering 131% year-to-date (YTD) as one of the biggest winners of this year’s cannabis decriminalization campaign. That said, its past quarterly earnings have certainly left something to be desired.
Indeed, the cannabis grower reported an EPS loss of $1.79 in its last quarter, worse than projections for a 45 cent loss. While this week’s legislative news won’t affect the company’s bottom line at its earnings later this month, it certainly gives it a strong talking point on which to anchor future growth.
On the date of publication, Shrey Dua did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
