Week In Review: U.S. Historic Policy Shift on Cannabis; Canopy Growth Raises $50 Million; Thailand Steps Back from Legalization; Canada Exports Boom

LOS ANGELES–Welcome to the far too-exciting world of cannabis and psychedelics, where it’s a tale of two markets with some states doing amazingly well. And some, well…they’re not doing so well (hello New York). Let’s get to it!

Cannabis Industry Highlights

#1 U.S. Policy Shifts on Cannabis: In a landmark policy shift, the U.S. Drug Enforcement Agency (DEA) has announced plans to reclassify cannabis from a Schedule I to a Schedule III controlled substance, a category that includes less restricted drugs. This change reflects a growing recognition of the failed War on Drugs as well as the potential medicinal benefits of cannabis, historically used for pain relief and various medical conditions.

Cannabis business owners hoping to benefit from the Biden administration’s plan to reschedule the drug may face disappointment, experts warn.

The administration announced last Thursday it will reclassify cannabis from Schedule I to Schedule III under the Controlled Substances Act (CSA). This change could allow businesses to deduct expenses from federal taxes, a shift from current prohibitions under Schedule I and II.

While some in the industry see this as a positive step, experts urge caution. The drug will still face stringent CSA regulations and remain unapproved under the Food Drug and Cosmetic Act, complicating sales and banking services.

Paul Armentano, deputy director of the National Organization for the Reform of Marijuana Laws, criticized the rescheduling as insufficient and highlighted the uncertainty ahead. “This move takes us into uncharted territory,” he said, noting that evolving policies will shape the industry’s future.

Despite state-level legalization fostering industry growth, cannabis businesses still struggle with limited access to credit and bankruptcy protections. “We need the cannabis industry, which employs over 425,000 people, to be treated like any other legal industry,” Armentano emphasized.

Experts stress that significant reforms must come from Congress. Senate Majority Leader Chuck Schumer (D-N.Y.) recently reintroduced legislation to remove cannabis from the CSA entirely, urging Congress to align with public opinion and scientific consensus.

This announcement led to a swift increase in cannabis-related stocks, reflecting growing market excitement.

Forbes reported that Canopy Growth Corp. shares closed at approximately $11, marking an over 11% increase to a one-month high. Aurora Cannabis, another Canadian producer, saw its stock rise nearly 7%, closing at almost $8 per share. Green Thumb Industries’ stock increased by nearly 3%, reaching just over $13.

Trulieve Cannabis Corp shares rose nearly 6% to just under $13 per share, while Tilray Brands’ shares increased by roughly 2.5% to over $2 per share. Cronos Group’s stock also saw a rise of over 4%, closing at more than $3 per share.

Despite these gains, many cannabis stocks remain significantly below their five-year highs. For instance, Curaleaf is down nearly 66% from its February 2021 peak, and Tilray has dropped nearly 97% from its high in the same month, as reported by Reuters.

#2. Canopy Growth Raises $50 Million Through Exchange and Subscription Agreement: Canopy Growth, a cannabis producer based in Smiths Falls, Ontario, has raised approximately $50 million (68 million Canadian dollars) in gross proceeds through an exchange and subscription agreement with an institutional investor. The company announced this development on Friday, specifying that the net proceeds will be used for working capital and general corporate purposes.

#3. Thailand’s Prime Minister Proposes Recriminalization of Cannabis: Thailand’s Prime Minister, Srettha Thavisin, announced on social media his intention to recriminalize cannabis, permitting its use solely for medicinal purposes. This move aligns with earlier suggestions from the country’s health minister and marks a significant shift from the existing laws that decriminalized the plant in 2022. The decriminalization made Thailand the first Asian country to enact such liberal cannabis policies, which led to widespread cultivation and trade, particularly aimed at supporting medical access.

#4. Canadian Medical Cannabis Exports Hit Record High Amid Domestic Decline: Canada’s medical cannabis industry has achieved a new milestone in exports, reaching a record CA$218 million in the fiscal year 2023-24, a substantial increase from CA$8 million in 2019-20. This surge is attributed to Canada’s ability to produce high-quality cannabis at competitive prices, positioning it as a favored supplier in the global market, according to Deepak Anand from ASDA Consultancy Services.

Psychedelic Sector Update

#1 Reunion Neuroscience Secures $103 Million for Development of Psychedelic Drug Therapy: Reunion Neuroscience Inc., a developer of psychedelic drug treatments, has successfully raised $103 million in a Series A financing round. The round was co-led by MPM BioImpact and Novo Holdings, with additional participation from various healthcare investment firms including Arkin Bio Capital and Mitsui & Co. Global Investment. This funding marks a pivotal step for Reunion, which was initially spun out from Field Trip Health, a network of ketamine clinics.

#2 Study Finds Psilocybin Use Does Not Significantly Alter Religious Beliefs: A new study from Johns Hopkins University, published in the Journal of Psychoactive Drugs, indicates that a single psilocybin experience is unlikely to change an atheist’s belief in God or alter a person’s sense of free will. However, the study found that psilocybin may lead to increased perceptions of consciousness in animals, plants, and even inanimate objects like rocks and robots.

– Canopy Growth’s Retail Optimization: The closure of five Canopy Growth retail locations is a strategic decision aimed at enhancing operational efficiency. This move reflects the company’s efforts to streamline operations and focus on profitable growth areas, amidst the challenges of a competitive market.

– Aurora Cannabis Enters the U.S.: Aurora’s strategic acquisition to enter the U.S. market represents a significant milestone. By taking a majority stake in a leading U.S.-based CBD company, Aurora is not only diversifying its portfolio but also positioning itself to capture growth in the world’s largest cannabis market.

– Washington’s Tax Relief for Medical Cannabis: The elimination of the 37% tax on medical cannabis in Washington State marks a progressive step towards supporting medical patients and designated providers. This legislative change is expected to make medical cannabis more accessible and affordable, potentially setting a precedent for other states to follow.

– Pure Jamaican’s Global Ambitions: The initiative by Pure Jamaican and Seven Ten Limited to export pharmaceutical-grade cannabinoid products underscores Jamaica’s emerging role in the global cannabis market. Targeting major markets like the USA and Brazil, this move highlights the country’s potential as a key exporter of cannabis and hemp products.

– Indiana’s Psilocybin Research Initiative: The state’s pending legislation to advance psilocybin research for mental health treatment highlights a growing recognition of the potential benefits of psychedelic substances. This initiative, particularly focused on veterans and first responders, could pave the way for broader acceptance and utilization of psilocybin in mental health care.

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