Shares of Canopy Growth (CGC 2.41%) were flying 19.2% higher as of 10:06 a.m. ET on Monday after jumping as much as 21.8% higher earlier in the morning. The gain came after Vice President Kamala Harris on Friday called for the federal government to move more quickly on rescheduling marijuana.
Harris held a roundtable discussion on marijuana reforms at the White House. She stated during the meeting that the current scheduling of marijuana as a Schedule I drug alongside heroin is "absurd" and "patently unfair." The Biden administration has initiated efforts to reschedule marijuana to Schedule III, which would categorize the drug as having a "moderate to low potential for physical and psychological dependence."
What would marijuana rescheduling mean for Canopy Growth?
Importantly, rescheduling marijuana to Schedule III would not make the drug legal at the federal level in the U.S. Canopy Growth would still be prohibited from entering the U.S. market and maintaining its listing on the Nasdaq stock exchange.
However, such a rescheduling could make it easier for Canopy Growth to partner with U.S. companies. It could especially boost Canopy's strategy to create a U.S.-based holding company, Canopy USA. Once this holding company is created, it would be able to exercise Canopy Growth's rights to acquire several U.S. cannabis companies, including Acreage Holdings and Lemurian.
Is Canopy Growth stock a buy?
Although rescheduling marijuana would help Canopy Growth, I don't think this makes Canopy Growth stock a smart pick to buy right now. Rescheduling would also help other cannabis stocks, including several in the U.S. that are already profitable.
Risk-averse investors are better off avoiding cannabis stocks altogether. Aggressive investors should be able to find more attractive stocks to buy than Canopy Growth.
