HHS makes cannabis recommendation, outcome may get delayed, says TD Cowen WRG

TD Cowen Washington Research Group analyst Jaret Seiberg notes that the HHS has recommended that the DEA drop cannabis to Schedule 3. This would be a big policy win and fix the 280E tax problem, and yet it is far from a perfect solution, the firm says. There are political reasons for why it may be delayed. TD Cowen WRG questions if DEA would act before the election. President Biden is unlikely to gain any new voters because he moved cannabis to Schedule 3 as these voters already are likely to favor him to any of the likely GOP nominees. By contrast, he risks support from independents who may not favor any change in drug laws. Those independents are the key to winning swing states. Further, TD Cowen WRG notes that cannabis would now be FDA regulated, which means the state regimes would still conflict with federal law, hence not solving banking or capital markets. Publicly traded companies in the space include Aurora Cannabis (ACB), CV Sciences (CVSI), CannTrust Holdings (CNTTF), Canopy Growth (CGC), Cronos Group (CRON), Goodness Growth (GDNSF), Green Thumb Industries (GTBIF), IGC Pharma (IGC), Tilray (TLRY), Trees Corporation (CANN), Trulieve Cannabis (TCNNF) and Zynerba (ZYNE).