Why Canopy Growth Stock Was on Fire Today

What happened

An apparently top-down new push to effectively decriminalize marijuana was the spark that lit Canopy Growth (CGC 13.24%) stock on Wednesday. That allowed the Canadian pot purveyor to easily surmount the hump of Hump Day, with its stock closing nearly 13% higher. That was a far better performance than the 0.4% rise of the S&P 500 index.

So what

Before market open this morning, Bloomberg reported that an unnamed “top official” at the government’s Department of Health and Human Services (HHS) formally requested that marijuana be reclassified as a far less threatening drug than at present.

The HHS official addressed the letter to the Drug Enforcement Agency’s (DEA) administrator, Anne Milgram. Bloomberg wrote that it had seen the letter, and a DEA spokesperson it did not name acknowledged the agency received it.

The DEA classifies drugs according to a set of “schedules.” A Schedule I substance like marijuana has “no currently accepted medical use and a high potential for abuse” and is, thus, considered dangerous. Marijuana is joined by heroin and LSD in this classification.

Down the ladder, Schedule III drugs hold “a moderate to low potential for physical and psychological dependence.” This list is populated by formulations such as testosterone and anabolic steroids.

Now what

That DEA spokesperson contacted for the article said the agency would initiate a review into the matter. This doesn’t, of course, mean that America is about to throw the switch on full-throttle marijuana legalization just yet. The wheels of government, particularly the federal government, turn slowly.

But it’s an indication of just how strong the support for pot decriminalization has become that an influential health official is openly advocating for change. Canadian cannabis companies, hamstrung as they are by their ever-struggling domestic market, would very much benefit from serious U.S. weed reform.

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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