DEA’s High-Stakes Hearing, Canopy’s Risks & Aurora’s Strains

Thanksgiving buzz: Canopy’s shareholder challenges, and a December hearing that could reshape cannabis policy.

Author

Nicolas Rodriguez
November 27, 2024

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It’s the Wednesday before Thanksgiving, and while kitchens everywhere are bustling, so is the cannabis world. Aurora Cannabis is cooking up ultra-potent strains, but investors are watching its stock tread delicate waters. Meanwhile, Canopy’s acquisition of Acreage raises tough questions for shareholders, and the DEA is gearing up for a pivotal December hearing on rescheduling marijuana—setting the stage for what could be a seismic shift in cannabis policy.

We’re Nicolás Rodríguez and Patricio Liddle, here to serve the latest cannabis news and insights while you prep for the big feast. Let’s dive in—you won’t even need gravy for this one.

Aurora’s Balancing Act: High-Potency Products, Low-Valued Stock

Aurora Cannabis (NASDAQ: ACB) continues to make waves with new product launches and a technical stock analysis that reveals opportunities amid volatility. The Canadian cannabis giant recently introduced innovations like the ultra-high-potency indica Noculus (THC: 25-31%) and the veteran-focused sativa Esprit De Corps (THC: 20-29%). This aligns with its mission to enhance patient care, as seen in its 29% year-over-year revenue growth, driven by a 41% surge in global medical cannabis sales.

However, as Rolando García highlights, Aurora’s stock faces critical challenges. The stock is trading at $4.16—well below its book value of $7.10—and reflects the broader sector’s struggles amid political uncertainty. Key Fibonacci retracement levels suggest $4.16 is the "final line of defense" for bulls. Short-term traders eye $5.26 as a natural profit-taking zone, while long-term holders could look to $6.04 as a recovery signal. However, a fall below $4.16 could send the stock tumbling toward its March low of $2.70.

Despite the bearish sentiment, Aurora's fundamentals suggest a potential undervalued opportunity for patient investors. But for now, the market will be watching closely to see if recent bullish divergences, indicated by the RSI, signal a turnaround—or more turbulence ahead.

Canopy USA’s (NASDAQ: CGC) mid-December acquisition of Acreage Holdings could have a significant impact on shareholders. Acreage disclosed that holders of Class E shares are likely to receive no value if Canopy’s stock remains below $5 upon closing, due to dilution caused by a June convertible note offering. Following this news, Acreage shares plummeted over 90% on Monday, while Canopy’s stock traded at $3.94. Floating shareholders will receive 0.045 Canopy shares per floating share. Acreage also reported a 30% revenue decline and a $22.2 million net loss in Q3 2024, reflecting broader challenges. With Luc Mongeau stepping in as CEO this January, Canopy’s U.S. strategy could see notable adjustments.

AI-Generated Image.

Despite market pressures, the U.S. cannabis industry continues to grow, reaching over $32 billion in annual retail sales in 2024—a 10.8% increase from last year, according to LeafLink's data. Projections suggest the market could hit $55 billion by 2030, driven by emerging markets like New York and Ohio, where companies such as Curaleaf Holdings and Green Thumb Industries are expanding. 

Moreover, potential federal policy shifts, like rescheduling cannabis to Schedule III, could inject an additional $2-3 billion annually into the industry.

LeafLink Is Doing Well Too

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Speaking of LeafLink, the wholesale platform just announced its acquisition of Leaf Trade, uniting two leading cannabis marketplaces. The merger aims to streamline operations across the supply chain, integrating advanced tools and financial solutions. The combined entity is set to process nearly $9 billion in annual gross merchandise value.

Picking up from yesterday's discussion on Biden's unfulfilled promise to pardon federal cannabis offenses, a group of 14 lawmakers -including Elizabeth Warren and Bernie Sanders- is urging the President to expand his clemency efforts. They emphasize that rescheduling cannabis isn't enough and call for immediate action to release those still incarcerated.

This Thanksgiving, while many gather with loved ones, let us remember those separated by a system overdue for change, and the work still needed to reunite them with their families and communities.

Rescheduling Rumble 

DEA GIF Via Tenor.

The DEA is set to open its first hearing on December 2 to discuss rescheduling marijuana from Schedule I to Schedule III—a potential game-changer for cannabis businesses. While this shift could finally unlock Section 280E tax deductions and pave the way for expanded research, it falls short of federal legalization, leaving many issues unresolved.

This procedural hearing won’t feature fireworks—no witness testimony yet—but it sets the tone for what’s to come. Tensions are already brewing, with the DEA at odds with the Department of Health and Human Services (HHS), which declined to provide witnesses. Adding fuel to the fire, allegations of backdoor communication with prohibitionist groups like Smart Approaches to Marijuana (SAM) have raised eyebrows, though both parties deny the claims.

With Congressional scrutiny mounting, delays stretching into 2025, and doubts about the DEA’s commitment to reform, this is one debate cannabis investors can’t afford to tune out. Stay sharp—this story is far from over. For deeper insights, check out Juan Spinelli's full coverage for Benzinga Cannabis.

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Our Writers Today

Nicolás holds a B.A. in International Relations, an M.A. in International Affairs, and an M.Phil in Public Policy. He is a doctoral student in Public and Urban Policy at The New School in New York City. After working for the United Nations in 2014, Nico pivoted his research to studying the relationship between the cannabis industry and economic development.

Patricio is a development economist with extensive experience in IT, finance, and banking. He writes about the economic and social opportunities obscured by over half a century of failed drug prohibition. Beyond his professional expertise, Pato is a committed advocate for social change, passionately working to promote harm reduction and reform drug policies.

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