The cannabis sector is awash in euphoria. But in this case, the “high” is from making money.

In a momentous departure from decades of entrenched policy, the U.S. Drug Enforcement Administration (DEA) is poised to reclassify marijuana to a less hazardous status.

According to news reports on Tuesday, April 30, the DEA intends to reevaluate marijuana, recognizing its medical benefits and lower potential for abuse compared to the most perilous drugs in the nation. This move does not equate to full legalization, but it’s a major loosening of regulations.

This proposal by the DEA represents the agency’s most substantial policy reform in over half a century.

Equities in the broader cannabis market generally climbed on the news, with the industry benchmark Amplify Alternative Harvest ETF (MJ) soaring 26.11% on Tuesday. The cannabis-focused exchange-traded fund has racked up a year-to-date return of more then 51.63%, compared to 5.94% for the SPDR S&P 500 ETF Trust (SPY) during the same period (as of market close May 1).

The rebound in pot stocks this year is very real and the DEA has given it legs. It’s quite a turnaround for the nation’s narcs.

At the heart of the issue is the classification of marijuana as a “Schedule I” prohibited narcotic under the federal Controlled Substances Act (CSA). The following chart shows the classification hierarchy:

Source: DEA

The CSA was passed in 1970, at a time when the widespread rebellion of the counter-culture prompted the Nixon White House to launch a “War on Drugs.”

President Richard Nixon declared a War on Drugs that over the years didn’t make much of a dent in drug consumption. The War on Drugs accomplished at least one goal, though: the mass incarceration of minorities in the U.S.

The War on Drugs is now discredited and lawmakers on both the federal and state levels are determined to dismantle it.

Pending approval from the White House Office of Management and Budget (OMB), the DEA will invite public commentary on the plan to transition marijuana from its current classification as a Schedule I substance, alongside heroin and LSD, to Schedule III, placing it among substances such as ketamine and certain anabolic steroids.

Most health professionals don’t think marijuana should be listed as a Schedule I controlled substance.

This change is based on recommendations from the federal Department of Health and Human Services. Following the public feedback phase and administrative review, the agency will proceed to publish the final rule.

The development follows President Joe Biden’s October 2022 call for a federal marijuana law review, coupled with efforts to pardon thousands of individuals federally convicted of minor marijuana offenses.

Biden has urged state governors and local authorities to take similar actions to expunge marijuana-related convictions, emphasizing the unnecessary societal barriers posed by criminal records linked to marijuana possession.

The announcement, strategically timed in an election year, may aid Biden in bolstering support, particularly among the younger demographic.

Biden and a growing cohort of bipartisan lawmakers have advocated for the DEA’s decision as societal acceptance and decriminalization of marijuana have gained traction, especially among younger citizens. A Gallup poll conducted last autumn revealed that 70% of adults support legalization, a stark contrast to the roughly 30% in favor two decades ago.

In recent years, federal drug policies have lagged behind state-level initiatives, with 38 states legalizing medical marijuana and 24 permitting recreational use.

This state-level progression has spurred rapid growth within the marijuana industry, estimated at nearly $30 billion in 2023, with potential reductions in tax liabilities of up to 70% for businesses if federal regulations are eased.

Additionally, this change will facilitate marijuana research, removing current impediments to conducting authorized clinical studies on Schedule I substances.

Crypto’s new bull market has started…

I regularly write about the opportunities in cannabis. But I also want to emphasize the big profits that await you in crypto.

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Read This Story: Cannabis and Crypto: The “Disruptive Duo”

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John Persinos is the editorial director of Investing Daily.

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