By Dean Seal
Shares of cannabis stocks slumped after a company set to testify in the Drug Enforcement Administration's rescheduling hearings accused the agency of obstructing the rulemaking process.
AdvisorShares Pure US Cannabis, a popular exchange-traded fund tracking marijuana stocks, was down 6.7% at $3.63 in afternoon trading. Shares of Curaleaf Holdings,
Green Thumb Industries and Verano Holdings, three of the biggest pot companies by market capitalization, were down 5% to 7%.
Village Farms International and the advocacy group Hemp for Victory filed briefs earlier this week supporting their requests for the DEA to be removed as a proponent of the rescheduling effort, which would reduce restrictions around cannabis, and declare definitively whether it supports or opposes the reform.
According to the filings, this is the first time ever that the DEA has refused to accept the Department of Health and Human Services' recommendation for a rescheduling. The agency has failed to gather data, engaged with opponents of the rescheduling and concealed the identities of those asked to participate in the rulemaking proceedings, Village Farms and Hemp for Victory said.
The parties are asking the administrative law judge in charge of the proceedings to replace the DEA with the Justice Department as the proponent of the rule change.
Cannabis stocks have taken a beating over the past year as the rescheduling process has progressed slowly and marijuana businesses have struggled with profitability. AdvisorShares Pure US Cannabis hit an all-time closing low of $3.53 in late December.