Cannabis stocks plummeted this week after a judge ordered the Drug Enforcement Agency (DEA) to respond to damning new allegations that it is working to undermine the cannabis rescheduling process.
Earlier this week, Business of Cannabis reported that attorneys representing Village Farms and Hemp for Victory submitted fresh evidence suggesting that the DEA has actively worked to undermine calls for cannabis to be rescheduled by using outdated and legally rejected criteria to discredit cannabis’ medical and scientific value.
In a new filing, submitted on January 06, the attorneys point to a recent declaration by a DEA pharmacologist that echoed ‘anti-rescheduling talking points,’ including claims that cannabis has a high potential for abuse and no accepted medical use.
This stance directly contradicts the findings of the Department of Health and Human Services (HHS), which recommended rescheduling using a broader two-factor analysis.
Moreover, the motion accuses the DEA of improper ex parte communications with opponents of rescheduling, including the Tennessee Bureau of Investigation and anti-cannabis organizations like Smart Approaches to Marijuana (SAM) and the Community Anti-Drug Coalitions of America (CADCA).
Now, DEA Administrative Law Judge John Mulrooney, who will oversee the upcoming hearings on cannabis rescheduling, has ordered the DEA to respond to these claims by January 13.
The allegations, if found to be true, would deal a significant blow to the DEA’s credibility in handling the rescheduling process, with the hearings set to begin on January 21.
As such, fear has emerged in the capital markets that rescheduling may be thwarted by the regulatory body.
Since the news broke earlier this week, New Cannabis Ventures’ American Cannabis Operator Index, representing the 10 largest listed cannabis operators in the country, fell by nearly eight percent.
AdvisorShares Pure US Cannabis ETF fell 6.7% to $3.63 during afternoon trading, nearing its all-time closing low of $3.53 reached in late December.
Curaleaf Holdings, Green Thumb Industries, and Verano Holdings all also declined between 5% and 7%, reflecting investor concerns across some of the largest cannabis companies by market capitalization.
