U.S.-listed cannabis stocks saw a significant jump on news of a potential federal reclassification of marijuana. Shares of Tilray Brands surged 35% in morning trading. Other major names, including SNDL, Canopy Growth, and ETF AdvisorShares Pure US Cannabis, rose between 20% and 31%.
The rally comes as former President Trump is expected to issue an executive order to reclassify marijuana. According to CNBC, the order could be announced as soon as Monday. The proposal would move marijuana from Schedule I to Schedule III under federal law.
Currently, marijuana is classified as a Schedule I substance under the Controlled Substances Act. This classification deems it high-risk with no accepted medical use. Schedule III status would treat cannabis similarly to some prescription painkillers, reducing oversight and restrictions.
“No final decisions have been made on the rescheduling of marijuana,” a White House official said, emphasizing that discussions are ongoing.
Analysts believe reclassification could transform the cannabis industry. TD Cowen analyst Jaret Seiberg noted it may allow pharmaceutical companies to gain approval for more cannabis-based products. These products could then be prescribed and dispensed like other medications.
The move could also ease criminal penalties and reshape the market by lowering taxes and expanding access to funding. Funding has long been a major hurdle for cannabis producers due to federal banking restrictions. Most banks and institutional investors avoid the sector, forcing companies to rely on costly loans or alternative financing.
Alliance Global Partners analyst Aaron Grey highlighted potential future catalysts for cannabis stocks. These include additional states legalizing marijuana, safer banking laws, and the eventual uplisting of cannabis stocks to major U.S. exchanges.
The Biden administration previously requested a review of marijuana’s classification last year. The Department of Health and Human Services recommended a move to Schedule III. The Drug Enforcement Administration must now review the recommendation before any official change occurs.
Investors are watching closely, as the potential rescheduling could mark a major turning point for cannabis stocks in the U.S. Market optimism reflects hopes of a more accessible and regulated industry with stronger growth prospects.
Cannabis stocks remain highly sensitive to federal policy, and the upcoming decision could reshape the industry for years.
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