Shares of Cronos Group(NASDAQ: CRON) were sinking 4.1% lower as of 10:57 a.m. ET on Tuesday and fell as much as 5.7% earlier in the day. The decline came after the U.S. Drug Enforcement Administration (DEA) announced it wouldn't hold a public meeting about rescheduling cannabis until Dec. 2, 2024 -- after the U.S. presidential election.
Cronos wasn't the only cannabis stock to slide on the news. Several others, including those based in the U.S. and in Canada, tumbled on the DEA's announcement.
Why does the DEA date matter for Cronos Group?
At first glance, when the DEA holds its public meeting about rescheduling cannabis might not seem to matter to Cronos Group. The company doesn't sell cannabis products in the U.S. It even exited the U.S. hemp-derived CBD market last year.
However, although Cronos Group doesn't compete in the U.S. now, it would undoubtedly love to enter the U.S. cannabis market in the future. The DEA's decision raises some concerns that cannabis might not be rescheduled before the next president takes office in January 2025 -- and perhaps not at all.
Is Cronos Group stock a buy on the dip?
I don't think Cronos Group stock is a great pick to buy on the dip. Cronos remains unprofitable, posting a net loss of $8.7 million in its latest quarter. Although it has opportunities in Europe, the lack of a U.S. presence limits the company's growth prospects. Investors who want to profit from the cannabis market have better alternatives that are already profitable and have stronger growth prospects, in my view.
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Keith Speights has no position in any of the stocks mentioned. The Motley Fool recommends Cronos Group. The Motley Fool has a disclosure policy.
