Canopy Growth's stock falls back from recent gains as cannabis stocks cool off

By Steve Gelsi

Pot stocks fall back but manage to hold on to most of their recent gains, for now

Canopy Growth Corp.'s stock fell about 14% on Tuesday after it more than doubled in the two previous days, as the sector pivoted away from rally mode.

The stock (WEED.T) had briefly moved higher earlier in the day before dropping down into the red, as most cannabis stocks cooled off after recent gains.

The AdvisorShares Pure US Cannabis exchange-traded fund MSOS fell 5%, Curaleaf Holdings Inc. dropped 1.3%, Trulieve Cannabis Corp. fell 3.5% and Green Thumb Industries Inc. fell 5.9%.

The AXS Cannabis ETF THCX dropped 2.8%, and Tilray Brands Inc. (TLRY) dropped 10%. Cresco Labs Inc. moved lower by 5.6%, Verano Holdings Corp. fell 10.5% and the ETFMG Alternative Harvest ETF MJ dropped by 5.2%.

Optimism around a potential rescheduling of cannabis fueled big gains in cannabis stocks in recent days after the U.S. Department of Health and Human Services last month recommended a Schedule III classification for cannabis under federal law.

However, on Tuesday, 14 Republican members of Congress wrote a letter to the Drug Enforcement Administration recommending against rescheduling and urged the agency to maintain marijuana's Schedule I status, as initially reported by Marijuana Moment. Schedule I is the most restrictive category under the U.S. Controlled Substances Act.

"In 2016, DEA rejected two petitions to reschedule marijuana," the letter said. "The rejection letter stated, 'At this time, the known risks of marijuana use have not been shown to be outweighed by specific benefits in well-controlled clinical trials that scientifically evaluate safety and efficacy.' We believe this analysis is still true today."

Also read:Once-mighty Canopy Growth loses billions as dream of pot riches runs into reality of oversupply and overspending

-Steve Gelsi

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09-12-23 1327ET

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