Trump Expected to Reclassify Marijuana Monday, Sending Cannabis Stocks Soaring

• Cannabis stocks experienced significant gains during Friday’s trading session, with Tilray Brands (TLRY) closing up 44.13% at $12.15 and rising further after hours, Canopy Growth (CGC) spiking nearly 53% in after-hours trading, Innovative Industrial Properties (IIPR) up 8.94%, and the Amplify Seymour Cannabis ETF (CNBS) rallying more than 54% to a record daily performance.
• Reports indicated President Donald Trump plans to issue an executive order directing federal agencies to reclassify marijuana from Schedule I to Schedule III, enabling improved tax regulations, banking access, and increased investment for cannabis companies.
• Industry leaders and analysts expressed optimism, viewing rescheduling as a major step toward normalizing cannabis under federal law, though emphasizing it as a partial victory requiring further efforts for full legalization and broader reforms.

Cannabis-related equities surged sharply on Friday, fueled by reports of imminent federal policy changes. Tilray Brands (TLRY) closed the regular session up 44.13% at $12.15, with after-hours trading pushing it further by 11.35% to $13.53. Canopy Growth (CGC) ended the day at $1.57 before spiking nearly 53% in after-hours to $2.40. Innovative Industrial Properties (IIPR), a key operator in cannabis greenhouses, rose 8.94% to close at $56.77 and gained an additional 1.25% after hours. The sector’s momentum was broadly captured by the Amplify Seymour Cannabis ETF (CNBS), which advanced more than 54% – its strongest single-day performance ever – to $34.82, followed by a 22% after-hours increase to $42.48.

These sharp gains were driven by disclosures that President Donald Trump plans to issue an executive order – potentially as early as the following Monday, according to CNBC – directing federal agencies to pursue reclassifying marijuana from Schedule I to Schedule III under the Controlled Substances Act. Currently positioned alongside substances like heroin, marijuana’s potential move to Schedule III would align it with drugs having accepted medical uses and moderate dependency risks, such as certain steroids and codeine combinations. This adjustment would enable cannabis firms to access more favorable tax treatments and facilitate greater institutional investment, while also permitting banks to provide services to the industry without prior restrictions.

Industry analysts expressed strong support for the development. Ed Groshans of Compass Point described the anticipated change as highly beneficial, predicting that a presidential directive could lead the Drug Enforcement Administration to complete rescheduling by summer. Roth’s Bill Kirk highlighted additional monitoring of a pending Supreme Court case involving state cannabis regulations and federal prohibitions, noting a favorable outcome could accelerate reforms.

Executives and legal experts within the sector conveyed measured optimism. Tilray CEO Irwin Simon told CNBC he feels more positive about the industry’s outlook than at any prior point. Shawn Hauser of Vicente LLP characterized rescheduling as a meaningful but incomplete step, emphasizing the need for ongoing advocacy toward full legalization and comprehensive federal regulations addressing safety, access, and justice system impacts. She further noted that such a policy shift would begin reversing long-standing federal approaches inconsistent with current scientific understanding of cannabis.

The cannabis market has faced prolonged challenges, including limited banking access and punitive taxation under Section 280E of the Internal Revenue Code, contributing to volatility even amid increasing state-level acceptance. Tilray shares, for instance, have traded recently above $10 following a peak of over $2,140 (split-adjusted) in September 2018, reflecting the sector’s post-2018 difficulties despite growing public and medical recognition of cannabis. Reclassification to Schedule III represents a pivotal federal acknowledgment of these evolving dynamics, potentially stabilizing operations and attracting capital, though broader legalization remains a future objective for full industry normalization.

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