Equity research firm Zuanic & Associates convened a panel in mid-June featuring industry experts to dissect the ongoing cannabis rescheduling efforts in the US. They provided a comprehensive outlook on the rescheduling process, expected to conclude with the publication of the Final Rule in the Federal Register by November 2024.
Despite market skepticism reflected in the MSOS ETF's (NYSE:MSOS) recent decline to $6.99—a 38% drop from its peak—Pablo Zuanic, Senior equity analyst Pablo Zuanic, sees the current market conditions as a buying opportunity.
He noted, "Technical factors and the absence of immediate catalysts might limit short-term gains, but the fundamentals remain strong."
The panel included Kelly Fair Partner at Dentons, David Culver SVP of Public Affairs at the US Cannabis Council, and John Sullivan EVP of Public Affairs at Cresco Labs (OTC:CRLBF).
Key Developments And Timeline
The experts expressed confidence in the rescheduling process, anticipating the completion of necessary administrative steps before the upcoming election. The DEA's initial hesitance is expected to be overcome by new evidence during the public comment period.
Additionally, the DOJ is likely to issue a memorandum to provide a safe harbor from enforcement for financial institutions, despite cannabis remaining federally illegal.
"The DOJ's upcoming actions are crucial for clarity and future regulatory frameworks," Zuanic wrote in a report.
The Trump Factor
The panel also discussed potential political influences, particularly regarding Donald Trump. They speculated on whether Trump might address cannabis rescheduling during the June 27 debate. If Trump wins the 2024 election, a Congressional Review Act (CRA) could be triggered if a member of Congress calls for a "resolution of disapproval."
However, the panelists say it's unlikely that both chambers would agree to reverse the rescheduling rule via a majority vote. They noted that if Trump wanted to reverse the rescheduling, his Attorney General would need to initiate a new rescheduling review process, which could take about two years and would likely face significant legal and scientific challenges.
Political Considerations And Future Projections
The panel also discussed potential political influences on the rescheduling process, including the impact of the presidential election. They anticipate that any attempts to reverse rescheduling post-election would face significant legal and scientific challenges, rendering them unlikely to succeed.
As the deadline for hearing requests approaches on June 20, the cannabis industry is closely watching for the DEA's decision on whether to grant hearings. The outcome of these hearings, along with the subsequent administrative review and final publication of the rule, are poised to be pivotal moments for the sector.
Cannabis rescheduling seems to be right around the corner. Want to understand what this means for the future of the industry? Hear directly for top executives, investors, and policymakers at the 19th Benzinga Cannabis Capital Conference, coming to Chicago this Oct. 8-9. Get your tickets now before prices surge by following this link.
Photo by Clay Banks on Unsplash.