The Highlights
It was another strong week for cannabis stocks, with the US cannabis MSOS ETF gaining 3.40% and the global YOLO ETF increasing 1.06%. Since the US Department of Health and Human Services (HHS) announcement on August 30, MSOS is +69.07%, while YOLO is +34.82%. We are in the midst of a catalyst-driven rally, driven by the potential to get to Schedule III and remove the 280E tax burden, which affects plant-touching US operators. Among the larger operators, Ascend (CSE: AAWH, OTCQX: AAWH) +25.44% had the strongest week, followed by MariMed (CSE: MRMD, OTCQX: MRMD) +12.14%. California combo Gold Flora (NEO: GRAM, OTCQX: GRAM) was +67.17% this week and is +83.89% YTD. The Cannabist (NEO: CBST, OTCQX: CBSTF) lost 12.53%, but remains a healthy 17.65% YTD. On Friday afternoon, the HHS released an unredacted copy of its 252-page document recommending cannabis be moved to Schedule III. The documents were released to attorney Matt Zorn who had sued the government over the Freedom of Information Act (FOIA). Those interested can read the full basis for the recommendation via the link in our full report. The recommendation is stronger than we expected. The HHS concludes that cannabis “has a currently accepted medical use in treatment in the United States” and has a “potential for abuse less than the drugs or other substances in Schedules I and II.” While we would be thrilled to get to Schedule III, descheduling remains the right solution. More than eight million people die from tobacco use every year, while alcohol kills 140,000 people annually. Neither are scheduled. Cannabis has medical value with few, if any, documented deaths. While those in the industry may have been aware of the HHS recommendation, releasing the full basis is causing an uptick in mainstream media coverage. The news was on the front of the New York Times and CNN. Tilray (NASDAQ: TLRY) is currently in the top three most discussed on the popular Reddit Wall Street Bets subreddit. On Tuesday at 4:00 pm ET, we will be hosting a special Higher Exchanges episode to discuss the HHS news. Those interested can listen live on Apple Podcasts, Google Podcasts, and Spotify the following day. Links in our full report.
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