Key Takeaways
- Trulieve shares fell about 14% after a DEA administrative law judge paused the case on moving marijuana to Schedule III on Tuesday afternoon.
- The pause followed a September 23 GAO report on drug scheduling, which the parties opposing rescheduling used to ask for the stay.
- Schedule III would end the Section 280E tax penalty on cannabis operators, which is the heart of the bull case for Trulieve’s earnings and cash flow.
- The DEA has until October 13 to say whether it will reopen the hearing record, so stay tuned.
Trulieve Cannabis (TRLV) is down about 14% today even as the broader market edges higher.
The reason? Cannabis rescheduling just hit a speed bump.
What exactly happened
On Tuesday afternoon, a Drug Enforcement Administration (DEA) administrative law judge paused the pending case on moving marijuana to Schedule III. Trulieve and the AdvisorShares Pure US Cannabis ETF (MSOS) slid after hours. The selling carried into Wednesday’s session, with MSOS down about 9% today.
The details:
- The trigger was a September 23 report on drug scheduling from the Government Accountability Office.
- The parties opposing rescheduling asked for the stay. They pointed to “gaps” flagged in that report.
- The DEA now has until October 13 to say whether it will reopen the hearing record.
Why this matters: Taxes
Here’s the thing: With broad decriminalization already under way, a big part of the bull case for cannabis stocks runs through Section 280E of the tax code.
That rule says businesses selling Schedule I or II drugs can’t deduct ordinary expenses like rent, payroll, and marketing. So operators like Trulieve pay tax on something much closer to gross profit than, like, actual profit.
Schedule III would end that penalty, and the savings flow straight into earnings and cash flow.
What’s next
The big question for me is how much of that tax relief Wall Street had already baked into its forecasts.
If analysts were modeling Schedule III soon, the pause makes those numbers look early. If they weren’t, today’s selloff is mostly about sentiment.
The main risk is the calendar. Whatever the DEA says on October 13, a rescheduling recommendation before the November midterms now looks less likely. And every quarter without Schedule III is another quarter of 280E tax bills.
So what is Trulieve stock actually worth?
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Disclaimer
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
