Cannabis stocks gain as DEA pressed for marijuana rescheduling

Cannabis stocks have outperformed the broader market this year as the U.S. Drug Enforcement Administration (DEA) increasingly comes under pressure from lawmakers to reschedule marijuana from a high-risk to a low-risk category under the Controlled Substances Act (CSA).

The AdvisorShares Pure US Cannabis ETF (NYSEARCA:MSOS), which represents U.S. multi-state operators, has returned ~26% this year when the S&P 500 has gained only ~6% YTD, as investors hope for a positive outcome from the ongoing DEA review.

The same applies to other cannabis-related ETFs, including the ETFMG Alternative Harvest ETF (NYSEARCA:MJ). Amplify Seymour Cannabis ETF (NYSEARCA:CNBS) and AdvisorShares Pure Cannabis ETF (NYSEARCA:YOLO)

The latest salvo on DEA came from a group of 21 Democratic lawmakers led by Sens. Elizabeth Warren (D-MA), John Fetterman (D-PA), and Reps. Earl Blumenauer (D-OR) and Barbara Lee (D-CA).

In a letter sent on Wednesday, they urged DEA Administrator Anne Milgram and Attorney General Merrick Garland to “promptly remove marijuana from Schedule I,” where cannabis is currently grouped alongside dangerous drugs like heroin and LSD.

In August, the U.S. Department of Health and Human Services (HHS) recommended that the DEA reclassify cannabis from Schedule I to Schedule III, reserved for medications like ketamine and Tylenol with codeine.

While some officials at the agency have suggested that the review could take up to six months, “almost eight months have now passed since the DEA received HHS’s recommendation,” the lawmakers wrote.

“While we understand that the DEA may be navigating internal disagreement on this matter, it is critical that the agency swiftly correct marijuana’s misguided placement in Schedule I,” they added.

Similarly, in March, U.S. Vice President Kamala Harris urged the DEA to immediately reschedule cannabis. Her remarks came soon after a congressional hearing in which HHS Secretary Xavier Becerra defended his department’s decision to recommend the move.

However, according to a Wall Street Journal report in March, some officials within the DEA have voiced opposition to any rescheduling decision, noting the drug’s potential for abuse and other concerns.