Cannabis assets appeared to be in freefall over the past week. No longer propelled by the earlier momentum that followed calls from the Department of Health and Human Services (HSS) to review cannabis classification, companies aligned with the industry have succumbed to market pressures.
Late August saw an appeal put forward to the Drug Enforcement Administration (DEA) calling for a reevaluation of marijuana's classification from its current Schedule I status - where it is grouped with substances such as LSD and heroin - to reclassification as a Schedule III drug, in line with substances such as ketamine and testosterone. This shift would also serve to remove cannabis from the list of substances considered devoid of medical value.
Such as move could have far-reaching implications, including helping to reduce perceived stigma around cannabis use, particularly for medical reasons. Interestingly, marijuana currently carries a higher perceived risk than fentanyl under its Schedule I classification - despite the high number of fentanyl-associated fatalities across the U.S. This skewed positioning underscores another strong reason to favor reclassification.
Given the support shown by the HSS – and the significance of such a move - cannabis stocks predictably skyrocketed, buoyed by the potential opportunities of an industry on the brink of mainstream acceptance.
Last week struck a deafening blow to any such optimism, however. Against the S&P 500 benchmark index that had already fallen by 2.21% for the week, ETFs focused on cannabis & psychedelics plunged more than 17%.
As an example, AdvisorShares Pure US Cannabis ETF (MSOS) witnessed a punishing week-over-week decline of 22.45%.
Segment Data: Cannabis & Psychedelics
Funds Specific Data: MSOS, MJ, MJUS
This content was originally published by our partners at ETF Central.