In the realm of cannabis stocks, one particularly popular option is a company that gained prominence during the cannabis boom of 2017. However, since then, the company has experienced a significant decline in its share value, requiring a merger of shares to address the situation.
In April, there was a notable surge of over 80% in the company’s stock value. This development raised questions about the underlying reasons for this sudden increase.
One key factor contributing to this surge is the potential reclassification of cannabis in the United States. This change would have a significant impact on companies involved in the cannabis industry, including the company in question.
For over 50 years, cannabis has been categorized as a Schedule III substance by the DEA, placing it in the same group as heroin. However, under the proposed reclassification, cannabis would be moved to Schedule III, aligning it with substances like Tylenol with codeine. This shift could lead to tax incentives for cannabis companies, including the one experiencing the surge in stock value.
Additionally, the company’s exposure to the U.S. market has contributed to its recent success. With hopes of entering the U.S. THC market, the company issued additional shares to raise funds for potential acquisitions. These strategic moves could position the company for rapid growth if THC reclassification becomes a reality.
While the timeline for marijuana reclassification remains uncertain, the potential for less stigma surrounding the industry and increased profitability is promising. Investors are advised to closely monitor cannabis stocks, including the company that experienced a recent surge in share value. Despite the setback following the initial surge, there may still be opportunities for investment before a potential rally reminiscent of the 2017 boom.
