Pure Cannabis ETF Jumps 21% to $5.20 on Possible Schedule III Reclassification
President Trump's executive order to reclassify cannabis as Schedule III could proceed this week, driving MSOS up 21% to $5.20 while the ETF remains 90% below its $52 February 2021 peak. Schedule III status could eliminate 280E taxes and unlock profits for U.S. multi-state operators, but won’t legalize cannabis nationwide.
1. Regulatory Catalyst
President Trump’s executive order directs the Department of Justice to move cannabis from Schedule I to Schedule III under the Controlled Substances Act. The directive could either restart the DEA hearings required by law or waive them entirely, potentially expediting federal reclassification if the administration opts for a hearing waiver.
2. Market Reaction
The AdvisorShares Pure Cannabis ETF climbed 21% to $5.20 on the reclassification news, yet remains roughly 90% below its $52 peak in February 2021. Related names rallied broadly, with Tilray up 12% and Canopy Growth rising over 20%, reflecting sectorwide investor enthusiasm.
3. Tax and Profit Implications
Schedule III status would eliminate the burdensome Section 280E tax on cannabis businesses, potentially unlocking significant profitability for U.S. multi-state operators. Industry observers suggest this tax relief could support higher valuations for MSOS holdings, which currently trade at mid-single-digit EBITDA multiples.
4. Outstanding Uncertainties
Rescheduling does not equate to nationwide legalization or resolve ongoing banking and finance challenges in the cannabis industry. The exact regulatory path and timeline remain uncertain as investors await formal DEA action and potential guidance from federal agencies.