According to Thursday’s report, Trump plans to direct agencies to reclassify marijuana as a Schedule III drug, reducing oversight of the plant and its derivatives to the same level as some common painkillers and other drugs.“We believe this would open the door for pharmaceutical companies to seek approval for more cannabis products, which could then be dispensed in the same manner as other prescription drugs,” TD Cowen analyst Jaret Seiberg said in a note.
The Trump administration has sought to reclassify marijuana as a less dangerous drug, a shift that could ease criminal penalties and reform the industry by potentially lowering taxes and making it easier to secure financing.
Financing remains one of the biggest challenges for cannabis producers, as federal restrictions keep most banks and institutional investors out of the industry, forcing pot producers to turn to expensive loans or alternative lenders.
The move sets the stage for several catalysts, including “new states legalizing cannabis, safer banking and the ultimate uplisting of cannabis stocks hitting plants on major U.S. exchanges,” said Alliance Global Partners analyst Aaron Gray. Under the Controlled Substances Act, marijuana is listed as a Schedule I substance, meaning it has a high potential for abuse and currently has no medical uses.
Last year, the Biden administration asked the Department of Health and Human Services to review the classification of marijuana, and the agency recommended moving it to Schedule III classification.
The Drug Enforcement Administration must review the recommendation and will decide on the reclassification.
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