Cannabis stocks moved lower on Tuesday as hopes that marijuana could be rescheduled as a lower-risk drug in the US before the upcoming election in November were dashed.
Earlier this year, the Department of Justice (DOJ) in line with a recommendation from the Department of Health and Human Services proposed that because marijuana has accepted medical uses and less abuse potential than other substances in Schedules I and II of the Controlled Substances Act that the drug should be reclassified as Schedule III.
The proposal then went to the Drug Enforcement Administration (DEA) who, in a notice set to be published in the Federal Register on Thursday, have set a hearing on the matter for December 2.
The administrative hearing follows a 60-day public comment which saw the DOJ receive more than 40,000 submissions.
The DEA said it received “numerous requests” to hold the hearing in response to the proposed rescheduling.
The hearing’s goal is to “receive factual evidence and expert opinion” on the proposal and “any person adversely affected or aggrieved” by the proposal is invited to participate, the DEA said in its unpublished notice.
The timing of the hearing in December has created greater uncertainty about a potential rescheduling timeline.
The cannabis sector had hoped that the rescheduling process would be completed before the election as any momentum is set to be disrupted when President Joe Biden’s successor takes over in January.
This weighed on cannabis stocks on Tuesday, with the AdvisorShares Pure US Cannabis ETF, which tracks US cannabis stocks, down 11.5% to about $6.
The AdvisorShares Pure Cannabis ETF, which tracks global cannabis stocks, fell 7% to about $3.