Cannabis stocks were higher on Wednesday after the Department of Health and Human Services reportedly recommended the Drug Enforcement Administration (DEA) reclassify marijuana as a lower-risk drug.
Cannabis stocks like Aurora Cannabis, Tilray Brands, Cronos Group and SNDL Inc. climbed on the news.
Bloomberg reported that Assistant Secretary for Health Rachel Levine made the request in a letter to DEA Administrator Anne Milgram, asking to downgrade marijuana to a schedule III substance based on a recent Food and Drug Administration review.
Marijuana is currently classified as a schedule I drug under the Controlled Substances Act, meaning it has a high potential for abuse and no accepted medical use, along with drugs like heroin and LSD.
HHS is recommending reclassifying marijuana to say it has a moderate to low potential for dependence and a lower abuse potential, which would put it in a class with ketamine and testosterone.
Nearly 40 U.S. states have legalized marijuana use in some form, but it remains completely illegal in some states and at the federal level. Reclassifying marijuana as less harmful than drugs like heroin would be a first step toward wider legalization, a move backed by a majority of Americans.
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"Following the data and science, Health and Human Services (HHS) has expeditiously responded to President Biden’s directive to HHS Secretary Becerra and provided its scheduling recommendation for marijuana to the DEA on August 29, 2023," an HHS spokesperson said in a statement to FOX Business.
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"This administrative process was completed in less than 11 months, reflecting this department’s collaboration and leadership to ensure that a comprehensive scientific evaluation be completed and shared expeditiously," the spokesperson said.
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President Biden in October 2022 asked Becerra and Attorney General Merrick Garland to review how marijuana is scheduled under federal law.
If marijuana classification were to ease at the federal level, that could allow major stock exchanges to list businesses that are in the cannabis trade, and potentially allow foreign companies to begin selling their products in the United States.
Cannabis is legal in Canada, which has become the home in North America for publicly traded cannabis growers and distributors, many of which would be expected to expand into the United States if federal legalization follows there.
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Reuters contributed to this report
