00:00 Speaker A

President Trump is considering reclassifying cannabis as a less dangerous drug. That’s according to several reports. The move would take marijuana from a Schedule 1 drug, a classification it shares with heroin and LSD, and make it Schedule 3, which includes drugs like ketamine, steroids, and testosterone that are also seen as having medicinal uses. The news sent shares of cannabis company surging, the likes of Tilray, Curaleaf, and Trulieve, all up in the last week. Joining me now in the sector is Tim Seymour, Amplify ETFs portfolio manager and manager, has had long managed an ETF that’s in cannabis. Good to see you, Tim. Thanks for joining us.

00:52 Tim Seymour

Hey, hey, Julie. Great to be here. Thanks.

00:55 Speaker A

You know, I I want to take a step back and look at cannabis here because, man, it’s been a tough road. I know that you’ve been in these stocks for a while, and periodically you get these like spurts of interest from headlines or what have you into these stocks, but over the longer term, it’s been tough. What has been the biggest challenge? Let’s start there for the cannabis industry. Has it been the, you know, federal prohibition on cannabis, or are there other fundamentals that have made it tough?

01:28 Tim Seymour

There’s no question that the macro environment around federalization or lack thereof, any support within Washington, seemingly a political constituency behind it, and then suddenly that constituency can’t get through pretty traditional, either hardline on the other side that will never listen to a cannabis argument. That’s been the story over. We’re now talking about multiple presidential administrations that have presided over what has been a growing top line and a bipartisan political support for cannabis consumption trends. You know, all the exciting things that investors would want exposure to. And the backdrop, which is that it’s not terribly controversial that cannabis is understood and accepted on the consumer level, on the medicinal level, on the social level. Um, we’ve had the war on drugs, you know, ultimately, I think, been corrected, restructured, refocused, that it wasn’t necessarily where we thought the war was. Um, and so some of the social justice around that. But I mean, to drill back into your question, it’s a lot of the inconsistency of Washington. It is some of the dynamics of the cannabis industry itself that are that are structural, um, but a lot of it is dictated by the fact that this is federally illegal. It means that every state that legalizes a cannabis operator essentially has to set up differently in that state than they might in another state that’s approved them. So it’s a very asset-heavy industry. It’s an industry that a lot of critics would say, hey, ultimately there’ll be price compression. I mean, this is a plant. It’s not called, it’s called weed for a reason, right? Like anybody can grow it. Um, and there’s dynamics, and I don’t totally agree with that, certainly not on the quality side, um, but there’s been a lot of different ingredients here. And I I think then just bringing it to the market side and as someone that’s had a background in emerging markets and I spent a lot of time investing in industries, but countries where there was low liquidity, there weren’t real exchange listings, there was a lack of institutional sponsorship, there was the inconsistency of the political dynamic. Yeah, that’s one of the things that that also is just a big part of why investing in cannabis has been volatile, has been a series of roller coasters. I feel like we’ve had four cycles in the last six years, um, and maybe eight years that I’ve been focused in the space for probably close to 10.

05:43 Speaker A

So, okay, so let’s bring it to deregulation then and the rescheduling potentially, right? We’ve heard these reports before. They haven’t come to fruition, but why would that be, uh, you know, it wouldn’t necessarily be the game changer that full legalization would be. So what effect would rescheduling have on the industry?

06:08 Tim Seymour

Yeah, I think rescheduling is powerful, and I think you don’t need federalization to have a big impact for the industry.