The FDA is Set to Re-Open Public Comments to Seek Input on the Rescheduling of Cannabis
This Could Be the First of Many Major Catalysts That Will Drive These U.S. Cannabis Stocks Higher
In case you aren’t aware, the United States Government currently lists cannabis as a schedule 1 drug in accordance with the Controlled Substances Act (CSA). This means the FDA and DEA believe cannabis has no medical value and has a high potential for abuse. Cannabis sits alongside Heroin, Ecstasy (MDMA) and LSD as the most notable schedule 1 drugs. The FDA’s recent approval of GW Pharma’s (NASDAQ: GWPH) Epidiolex directly contradicts the U.S. Government’s bizarre schedule 1 classification of cannabis. Clearly, the FDA believes GW Pharma’s cannabis-derived CBD based drug which treats seizures associated with the two rare forms of epilepsy has medical value. It’s very obvious this outdated drug schedule needs to be changed ASAP.
To make matters even more confusing, killer drugs such as Cocaine, Methamphetamine, and Oxycodone are listed below cannabis as schedule 2 drugs. This schedule 2 listing indicates there is a belief that these substances possess some medical value. I can see their case for Oxycodone as being useful to treat severe pain in medical patients on their deathbed but Cocaine and Meth should never be ranked below cannabis. Mindblowing situation to say the least.
Today’s news from the U.S. Food and Drug Administration (FDA) indicates this completely messed up drug ranking system could be getting a long-overdue update. The FDA issued a notice today informing the public it will give U.S. citizens the opportunity to have their voice heard and provide comments on the idea of removing cannabis from the most restricted schedule 1 class of drugs. This is being done for the purpose of international treaties.
Included in the unpublished notice filed by the FDA on the Federal Register today was information indicating the regulatory body would officially open comments on the issue to the public tomorrow (Thursday). The public will have 30 days from this point to submit their comments on the rescheduling of cannabis electronically or by mail.
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If the United States does reschedule or even deschedule cannabis it would be a huge step in the right direction for the largest market in the world. The move would serve as a major catalyst for leading U.S. multi-state operators such as Curaleaf Holdings (CSE: CURA) (OTCQX: CURLF), Trulieve Cannabis (CSE: TRUL) (OTCQX: TCNNF) and Red White & Bloom (CSE: RWB – IPO Coming Soon). It would also be an enormous win for the U.S. cannabis industry as a whole but would not immediately make cannabis legal at the Federal level. Cannabis in the United States is still being held down by the fact that the Federal Government considers the drug to be illegal despite it being legalized medically or recreationally by the majority of the states.
The United Nations’s World Health Organization (WHO) is also recommending that cannabis be rescheduled. These are the dominos that need to fall first in order for the United States Federal Government to finally lift its Federal ban on cannabis. Progress is progress and investors should be happy to see conditions in the U.S. heading in the right direction.
I’ll finish off this article by leaving you with my watchlist of U.S. cannabis stocks that I believe will be positively impacted by the pending rescheduling or descheduling of cannabis in the United States. As you can see from today’s price action, the cannabis market is already responding well to today’s announcement. The majority of leading marijuana stocks closed trading today up anywhere from 1% – 12%.
Is this a sign of things to come? We’ll just have to wait and see. Most expect the market to rebound this September.
Feel free to email me with your watchlist so we can compare notes.
Red White & Bloom (CSE: RWB – IPO Mid September 2019)
- RWB is a new large MSO and is set to hit the public markets in a matter of weeks.
- Merging with Tidal Royalty (CSE: RLTY.U) (OTCPK: TDRYF).
- According to CEO Brad Roger’s presentation at the Benzinga Cannabis Capital Conference, RWB is expected to begin trading at a very attractive valuation compared to its industry peers.
- It is anticipated the company’s inaugural trading date will be announced in the coming days.
- RWB will be the only IPO of it’s kind this September.
- Going public with 9 figure revenues and a focus on profitability.
- Great share structure and unlike other large MSOs, RWB will have NO SUPER VOTING SHARES.
- RWB is a dominant player in the state of Michigan.
- Earlier this year, RWB announced a deal to acquire the world’s largest indoor premium Hemp/CBD facility located in Illinois.
- Stay up to date by joining the Red White & Bloom investor list here so you don’t miss any important updates.
Curaleaf Holdings (CSE: CURA) (OTCQX: CURLF)
- Curaleaf is set to become the largest cannabis company in the world.
- Momentum from the mega-merger announcement was quickly halted when the FDA fired a warning shot at Curaleaf.
- Curaleaf responded to the FDA warning letter and a leading analyst called the pullback a ‘strong buying opportunity.
- Curaleaf reported Q2 earnings yesterday. Revenue soared 231% to $48.5 million while its net loss increased to $24.4 million, or $0.05 per share.
- Curaleaf currently operates in 12 states and controls 48 dispensaries, 14 cultivation facilities and 13 processing sites.
Learn more about Curaleaf Holdings: Chart | Website | IR Website | Investor Deck
Trulieve Cannabis (CSE: TRUL) (OTCQX: TCNNF)
- Trulieve also reported its Q2 earnings recently.
- The company announced record revenue of $57.9 million for the quarter, up 149% year over year.
- Adjusted EBITDA increased from $19.0 million in Q1 2019 to $31.6 million in Q2 2019.
- Trulieve is the leader in the state of Florida with a total of 31 Trulieve-branded dispensaries.
- The company controls approximately 67% of the market share in Florida and has more than 250,000 registered medical patients in the sunshine state.
- Trulieve’s 31st Florida dispensary opened in mid-August and is located in Clearwater Beach Florida.
Learn more about Trulieve Cannabis: Chart | Website | IR Website | Investor Deck
Charlotte’s Web (CSE: CWEB) (OTCQX: CWBHF)
- In late July, Charlotte’s Web landed a colossal 1,350 store CBD distribution deal with Kroger.
- The Kroger deal will see Charlotte’s Web hemp-derived CBD products rolled out across the nation.
- The company’s products will be available at the following Kroger Family of Stores: Kroger, Dillons, Fry’s, Fred Meyer, King Soopers, Mariano’s, Pick ‘n Save, QFC and Smith’s.
- Charlotte’s Web recently reported its Q2 earnings as well.
- The company posted revenue of $25 million for the quarter, up 45% year over year. Earnings per share was $0.02.
- Adjusted EBITDA was $3.9 million.
Learn more about Charlotte’s Web: Chart | Website | IR Website | Investor Deck
Cresco Labs (CSE: CL) (OTCQX: CRLBF)
iAnthus Capital (CSE: IAN) (OTCQX: ITHUF)
- Chart
- Website
- IR Website
- Investor Deck
Green Thumb Industries (CSE: GTII) (OTCQX: GTBIF)
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Best of luck to you all and happy investing.
Ryan Troup
Editor in Chief | The Cannabis Investor
Email: Ryan@Circadian-Group.com
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Disclaimer: The Cannabis Investor owns a position in RWB.
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