Trump Reportedly Moving Marijuana to Schedule III – Cannabis Stocks Rip, Tilray (TLRY) Soars 39%

• Cannabis stocks are rallying sharply on Friday after reports that President Trump will push to reclassify marijuana as Schedule III early next year.
• Reclassification would shift cannabis away from heroin-level restrictions, eliminate the crushing 280E tax code, open banking services, and strengthen state-level regulation – delivering the most significant positive catalyst the industry has long awaited.
• Even with the surge, the sector remains in a deep multi-year slump, with stock like Tilray Brands (TLRY) still down more than 36% in 2025 before the move and Amplify Seymour Cannabis (CNBS) heading for a fifth straight yearly loss of more than 8%.

The prospect of marijuana’s reclassification from Schedule I to Schedule III under the Trump administration has ignited a surge in investor confidence within the cannabis sector, underscoring the profound regulatory pressures that have long constrained its growth. This shift, which would align cannabis with substances like certain prescription painkillers rather than heroin, promises to alleviate the burdensome 280E tax code that currently imposes effective rates approaching 60% on gross revenue for operators. Such relief could unlock billions in capital, enabling companies to reinvest in operations and expansion amid a market that has seen increasing state-level acceptance since the initial wave of public listings around seven years ago.

Tilray Brands (TLRY), a leading producer in the space, exemplifies the volatility tied to these developments, with shares climbing 39% to $11.71 in early Friday trading after years of uneven performance. Prior to this rally, the stock had declined 36% over the course of 2025, reflecting broader challenges like competitive pressures and inconsistent demand in mature markets such as Canada. Similarly, Canopy Growth (CGC) experienced a 27% jump to $1.43, highlighting how even established players remain sensitive to federal signals despite operational pivots toward international medical cannabis distribution. Innovative Industrial Properties (IIPR), which focuses on leasing facilities to cannabis operators, advanced nearly 6% to $55.15, benefiting from its position as a real estate investment trust insulated from direct cultivation risks while capitalizing on infrastructure needs.

The Amplify Seymour Cannabis ETF (CNBS), which tracks a diversified basket of U.S.-focused cannabis firms, captured this momentum with a 34.39% gain to $30.27, though it remains poised for an overall 2025 loss exceeding 8% – marking the fifth consecutive negative year for the fund. This persistent underperformance stems from a confluence of factors, including fragmented state regulations and limited access to traditional banking, which have deterred institutional investment even as public support for cannabis reform hovers around 64% nationally.

Analysts view the anticipated reclassification, potentially formalized through directives to the Department of Health and Human Services and Department of Justice early next year, as a catalyst for structural improvements. Ed Groshans of Compass Point emphasized in a note to clients that the change, first floated by Trump in August, was inevitable rather than speculative, positioning it to facilitate banking services and state-level oversight. Should an executive order follow in January, the Drug Enforcement Administration could finalize rules by summer, accelerating timelines. Bill Kirk of Roth added scrutiny on an impending Supreme Court review of state regulations versus federal prohibitions, where a favorable outcome might further expedite reforms.

These dynamics reveal the cannabis industry’s resilience amid adversity, where federal inertia has amplified operational costs and stifled scaling. Reclassification would not confer full recreational legalization but would affirm medical utility, potentially drawing in capital that has eluded the sector since its public debut. For investors, the Friday upswing signals a pivotal moment, though sustained recovery will hinge on execution of these policy shifts against a backdrop of evolving consumer trends and global competition.

WallStreetPit does not provide investment advice. All rights reserved.

• Bulenox: Get 45% to 91% OFF ... Use Discount Code: UNO
• Risk Our Money Not Yours | Get 50% to 90% OFF ... Use Discount Code: MMBVBKSM