Now That Cannabis Has Been Rescheduled

Yesterday's news was as expected, with President Trump issuing an Executive Order that moves cannabis rescheduling further along. If you ask ChatGPT, you will "learn" that it has been rescheduled:

Chat GPT suggests that the action has already rescheduled cannabis, but I don't think that it has. I visited the DEA website, and it is still listed currently as Schedule I. There is no news about the EO at all. Attorney General Pam Bondi, who is not a fan of cannabis from what I can tell, has not said anything yet on X.com. Her Department of Justice website says nothing.

I am all for cannabis not being Schedule I, but it still is. I have written about 280E taxation a lot at New Cannabis Ventures, including the newsletter in late 2022 where I called its potential elimination a huge potential catalyst for cannabis stocks, which have been in a bear market since early 2021.

While I have been covering cannabis stocks since early 2013, I do care about more than just the stocks. I have been and remain in favor of legalization of cannabis. In my view, this would require regulation at the federal level, which does not exist. Rescheduling cannabis could put us on a path to get to legalization, but it could be a very long process.

Cannabis stocks plunged yesterday after the "news" was released. Many expressed curiosity, wondering why the stocks would go down on such good news. The old adage "buy the rumor, sell the news" seems to be at work. While cannabis stocks are now down this week, they are up a lot so far in December and still up a bit in 2025. The New Cannabis Ventures Global Cannabis Stock Index, which closed at 7.30 after the plunge on 12/18, is up now 20.1% in December and 6.1% year-to-date. The AdvisorShares Pure US Cannabis ETF (MSOS), which has had a massive inflow this week, closed down 26.9% yesterday and ended down 15.7% since 12/12, which was the day the market roared higher on the "news" that Trump was going to reschedule cannabis. Here is the 1-year chart of MSOS:

If cannabis is rescheduled finally, 280E taxation will end. This is a major positive for the publicly-traded MSOs. The ETF is still up a ton from the all-time low set near $2 in April, but it is down now a lot since the close on 11/5/24 (Election Day) of $6.87 and from the 4/30/24 level of $11.26. Cannabis stocks are volatile!

So, while cannabis is not yet rescheduled, it may happen, and this would be good for the MSOs, as their tax-rates would plunge to normal. Of course, the federal government could impose an excise tax, but that could take some time. Another big potential catalyst for them would be NASDAQ allowing them to list. Many don't understand this, but federal law does not prohibit NASDAQ from doing so now. NASDAQ chooses not to do so, and rescheduling does not require it to change. Another issue has been banking, and SAFER Banking, which has failed many times, may or may not happen.

So, rescheduling did not happen, but it may happen. It should happen! Cannabis investors should be careful with MSOS in my view, as there is still some downside risk and a lack of clarity about the potentially positive path ahead.