While not a 2024 candidate, earlier this month former President Donald Trump announced that he would reclassify marijuana. This decision does have the potential to make a tremendous impact on the cannabis industry. Speaking at a fundraiser at Trump’s golf club in Bedminister, NJ, he said that a decision was imminent. So keep an eye out in the coming weeks. This announcement has injected renewed hope and interest into a cannabis market that has been ravaged and demoralized over the past few years.
The power to reclassify marijuana has always been with the Attorney General, as directed by the Controlled Substances Act. Since the inception of our drug laws, this responsibility has largely been handed down to the administrator of the Drug Enforcement Administration (DEA). The key takeaway from Trump’s statement is his understanding that even though he can push for change, the decision cannot be made on his own.
Impact on the Cannabis Industry
Shifting marijuana from Schedule 1 to Schedule 3 would represent a monumental shift in the cannabis industry. This change would create greater opportunities and transparency for industry and the public. Schedule 1 deems marijuana as dangerous or highly addictive with no currently accepted medical use in treatment in the U.S. Schedule 3 would recognize it as considerably less harmful and accept that it has medicinal value. If so, such a change would unlock tremendous new opportunities for research, investment, and commercialization of cannabis products.
Trump’s support promises to improve prospects for an industry that has been dealt a punishing hand. As a point of reference, the majority of cannabis stocks are trading below a dollar per share at the moment. This renders them extremely vulnerable to price increases, as a tiny rise can result in an outsized percent change. Even with Monday’s rally after Trump’s comments, a lot of cannabis stocks are still miles from their peaks.
“He wouldn’t be talking about it … if he’s not going to get something done.” – Irwin Simon, CEO of Tilray
Market Reactions and Predictions
In late July, the Wall Street Journal reported that Trump was open to downgrading marijuana’s classification. Consequently, cannabis exchange traded funds (ETFs) exploded in reaction. Environmental investors are eager for this policy pivot, expecting it to spur larger and more consistent market stability and growth. On Alterra’s earnings call, Irwin Simon cautioned that reclassification, while highly encouraging, could lead to new challenges in the market.
Simon estimated that the process of reclassification could take as long as about a year, knowing full well that it wouldn’t be easy. While industry advocates are still bullish, they’re getting ready for some bumps as the talks continue.