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Last week the U.S. Department of Health & Human Services (HHS) requested that the Drug Enforcement Administration reclassify marijuana's drug status to that of a Schedule III (i.e. lower-risk) substance based on a recent Food and Drug Administration review. If implemented it will substantially ease banking requirements for American MSO companies and be a step toward wider legalization -  currently, cannabis is illegal in 10 states and also illegal at the federal level - and allow major U.S. stock exchanges to list MSOs on their exchanges and potentially allow foreign companies to begin selling their products in the United States. That last possibility resulted in a 17% jump in Canada's average cannabis stock price last week (and a 20% increase in the average stock price of Canada's 5 largest licensed producers (LPs) as tracked in munKNEE's Canadian Cannabis LP Index) many of which would be expected to expand into the United States if federal legalization was to be realized there.

Below are the changes in the stock prices of the 5 constituents in the Index last week in descending order: (The impact of the potential reclassification on the 7 constituents in munKNEE's American Cannabis MSO Index can be read here.)

1. Canopy Growth (CGC): UP 41.0 %
   • Canopy Growth struck a deal in 2019 to acquire US-based Acreage Holdings (ACRHF/ACRDF) if cannabis production and sale became federally legal in the U.S. and established a U.S.-domiciled holding company, Canopy USA, to capitalize on any such reform. The abovementioned potential reclassification is a promising development for Canopy Growth as it would make the company profitable hence the out-sized appreciation in its stock price.  
2. Tilray (TLRY): UP 27.8%
   • The bulk of its sales are in Canada and in the international medical cannabis export market with limited exposure in the U.S. market with its CBD. Should the abovementioned potential reclassification be realized Tilray will be in an excellent position to expand its cannabis product line quickly into the U.S. which accounts for its sizeable stock appreciation on the news.  
3. Cronos (CRON): UP 16.6%
   • Should the reclassification of cannabis in the U.S. lead to the eventual legalization of the production and sale of cannabis in the U.S. it will create a wide-open U.S. market for recreational marijuana which would benefit a major established cannabis producer like Cronos.
4. OrganiGram (OGI): UP 10.8%
5. Aurora (ACB): UP 6.8%
    

Summary

1. The munKNEE Canadian Cannabis LPs Index was UP 20.8% last week but remains DOWN 34.4% YTD.
2. In comparison, the Global X Cannabis ETF (POTX), which consists of the above 5 highlighted Canadian stocks plus another 12 cannabis or cannabis-related (i.e. auxiliary) stocks was UP 17.2% last week but remains DOWN 32.7% YTD.

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