Cannabis Stocks Soared After White House Roundtable on Marijuana Reform

Harris stated during the meeting that the current scheduling of marijuana as a Schedule I drug alongside heroin is "absurd" and "patently unfair." The Biden administration has initiated efforts to reschedule marijuana to Schedule III, which would categorize the drug as having a "moderate to low potential for physical and psychological dependence."

In addition, Wedbush is "incrementally more positive" on the fundamentals of cannabis heading into 2024. With Q4 cannabis earnings wrapped up, the revenues, margins, and cash flow metrics for the leading U.S. Multi-state operators (MSOs) have shown broad-based improvement and exceeded expectations exiting the year, which are expected to continue.

"While this is encouraging, from an interest and sentiment perspective, the far more important potential catalysts on the docket are Florida adult use legalization and DEA rescheduling, both of which have a legitimate chance to pass in our view and both of which would obviously be transformative to the industry," analyst Gerald Pascarelli writes.

The most near-term is Florida, where an opinion on whether to include adult use cannabis on the 2024 ballot will need to be issued by the Supreme Court no later than April 1st. DEA timing remains more of a wildcard.

However, despite the cannabis industry's growth and accompanying favorable policies, there are still risks to investing, such as the wave of big acquisitions of smaller companies by the leaders in the sector. Analysts argue that this rapid expansion may be a case of too much too soon.

Additionally, many of these acquisitions and other deals were majority financed with stock, rather than cash, which is a risky approach that could make it harder for the companies to create per-share profit.

Source: MT Newswires, Yahoo Finance