Cannabis MSOs cool after rally driven by rescheduling hopes

U.S. MSOs recorded modest gains or were among notable decliners in the morning hours on Monday following a sharp rally in the previous session, fueled by President Donald Trump’s remarks that indicated his interest in reclassifying cannabis as a less dangerous drug.

AdvisorShares Pure US Cannabis ETF (NYSEARCA:MSOS), representing U.S. MSOs, traded lower for the first time in three sessions, while cannabis-focused U.S. stocks GrowGeneration (GRWG). Ayr Wellness (OTCQX:AYRWF), Cresco Labs (OTCQX:CRLBF), and Curaleaf Holdings (OTCPK:CURLF) gained.

However, Canadian Licensed Producer Tilray (NASDAQ:TLRY) rallied ~11%, while its peers Canopy Growth (NASDAQ:CGC), Aurora Cannabis (NASDAQ:ACB), SNDL Inc. (SNDL), and OrganiGram Holdings (OGI) posted modest gains, and Cronos (CRON) traded lower.

Other U.S. MSOs: Acreage Holdings (ACRHF), Green Thumb Industries (OTCQX:GTBIF), Trulieve Cannabis (OTCQX:TCNNF), TerrAscend (OTCQX:TSNDF), Verano Holdings (OTCQX:VRNOF)

Cannabis-focused ETFs: AdvisorShares Pure Cannabis ETF (YOLO), Global X Cannabis ETF (POTX), ETFMG Alternative Harvest ETF (MJ). Amplify Seymour Cannabis ETF (CNBS), AdvisorShares Pure US Cannabis ETF (NYSEARCA:MSOS)

“We’re looking at reclassification, and we’ll make a determination over the next few weeks,” Trump said on Monday, referring to an ongoing review at the U.S. Drug Enforcement Administration (DEA) to move cannabis from Schedule I to Schedule III under the Controlled Substances Act.

While the removal of 280E taxation following a potential rescheduling decision can benefit U.S. MSOs, Alan Brochstein, Investing Group Leader for 420 Investor, downgraded Amplify Seymour Cannabis ETF (CNBS) to Hold from Buy on Tuesday.

“There are many good reasons to reschedule cannabis, and I hope that they do, but investors should be aware of the risks if they do not,” Brochstein wrote.