Cannabis Sector Volatility Deepens After DEA Rescheduling Delay

LOS ANGELES- The cannabis industry faced heightened volatility as the MSOS ETF (NYSE: MSOS), which tracks U.S. cannabis companies, dropped by 15.24% following the DEA’s decision to delay rescheduling cannabis until December 2. The market response reflects growing uncertainty within the sector, as investors had anticipated regulatory clarity that could unlock further growth opportunities for cannabis businesses.

The DEA’s decision comes amid growing discussions around cannabis reform at the federal level, with rescheduling being a key issue for the industry. A move to Schedule III would reduce regulatory burdens, including easing tax constraints under Section 280E of the IRS code, which currently prevents cannabis businesses from deducting standard expenses. This reclassification could also provide greater access to banking services, an issue that continues to challenge cannabis operators across the country.

While the sector has seen significant regulatory and financial headwinds, the rescheduling delay introduces more uncertainty, causing the market to react sharply. Industry stakeholders are closely watching the federal government’s actions, as they could have long-term implications for both the financial health of cannabis companies and their ability to expand in the U.S. market

With the rescheduling decision now expected by December, the cannabis market is likely to remain volatile, as both investors and companies await more regulatory certainty. The impact of this delay also underscores the broader challenges faced by cannabis businesses operating in a fragmented regulatory environment.