Why Cronos Group stock is sinking today

Actions of Cronos Group (CHRON -4.13%) they sank 4.1% lower as of 10:57 a.m. ET Tuesday and were down as much as 5.7% earlier in the day. The decline came after the US Drug Enforcement Administration (DEA) announced it would not hold a public hearing on cannabis rescheduling until December 2, 2024 — after the US presidential election.

Cronos wasn’t the only cannabis stock to slide into the news. Several others, including those based in the US and Canada, collapsed following the DEA’s announcement.

Why does the DEA date matter to Cronos Group?

At first glance, when the DEA holds its public hearing on rescheduling cannabis, it might not seem to matter to Cronos Group. The company does not sell cannabis products in the US. It even exited the hemp-derived CBD market in the US last year.

However, while Cronos Group does not currently compete in the US, it would no doubt like to enter the US cannabis market in the future. The DEA’s decision raises some concerns that cannabis may not be rescheduled before the next president takes office in January 2025 — and maybe not at all.

Is Cronos Group stock a bearish buy?

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 most recent quarter. While it has opportunities in Europe, the lack of an American presence limits the company’s growth prospects. Investors looking to profit from the cannabis market have better alternatives that are already profitable and have stronger growth prospects in my opinion.