Investors drive cannabis stocks higher on reports Trump may move marijuana to schedule III
Cannabis stocks just delivered a breakout session as markets bet US President Donald Trump will finally unlock a long-awaited shift in US federal marijuana policy.
Cannabis names surged on Friday after several outlets reported that the White House is preparing to reclassify marijuana as a less dangerous drug.
According to CNBC, Tilray Brands and Canopy Growth jumped more than 44 percent and 52 percent, while cannabis greenhouse operator Innovative Industrial Properties gained nearly 9 percent.
The Amplify Seymour Cannabis ETF (CNBS) rallied more than 54 percent, its best day on record.
Reuters said Tilray rose 35 percent, while SNDL, Canopy Growth and the AdvisorShares Pure US Cannabis ETF (MSOS) climbed between 20 percent and 31 percent in morning trading.
Bloomberg reported similar moves, saying Tilray gained 31 percent and Canopy Growth advanced 23 percent as of mid-morning in New York.
CNBC reported that the rally accelerated after word that Trump is expected to issue an executive order as soon as Monday to allow for reclassification of marijuana, citing people familiar with the matter who were not authorized to speak publicly.
The Washington Post reported, as cited by CNBC, that Trump plans to direct federal agencies to move marijuana from Schedule I to Schedule III under the US Controlled Substances Act.
Axios reported that rescheduling — moving marijuana out of the same category as heroin and into a lower tier of less dangerous drugs such as steroids and Tylenol with codeine — could take effect early next year.
Bloomberg noted that marijuana is currently labelled a Schedule I drug, grouped with substances such as heroin and LSD and defined as having no medical use and a high potential for abuse.
Trump is weighing a move to Schedule III, a tier that includes ketamine, Tylenol with codeine and anabolic steroids and is viewed as having a lower potential for dependency.
Bloomberg reported that Trump has discussed the plans with Health and Human Services Secretary Robert F. Kennedy Jr. and Centers for Medicare & Medicaid Services Administrator Mehmet Oz.
He has spoken with Trulieve Cannabis Corp. CEO Kim Rivers and payments financier Howard Kessler, who has advocated for expanded CBD access.
A White House official told Bloomberg that no final decisions have been made on rescheduling, and Bloomberg reported that Rivers and Kessler did not respond to requests for comment.
CNBC noted that Trump first floated a change to marijuana’s classification in August and said a decision could come within weeks, as per Bloomberg’s account of his remarks at a New Jersey fundraiser reported by The Wall Street Journal.
Analysts describe a move to Schedule III as a structural, though incomplete, reset for how capital can flow into the cannabis space.
Ed Groshans of Compass Point wrote to clients that “Trump rescheduling marijuana was not an if, in our assessment, but a when,” according to CNBC.
Groshans called the reported shift “positive” for the cannabis industry and argued it would allow banks to serve the sector.
He added that if Trump orders rescheduling, he expects the Drug Enforcement Administration to finalize a proposed rule by the summer.
Bloomberg reported that reclassification would make it easier to buy and sell cannabis, potentially easing tax burdens and banking obstacles, drawing more mainstream lenders and investors and supporting medical research opportunities.
Reuters said Trump’s administration has been looking to reclassify marijuana as a less dangerous drug in a way that could ease criminal penalties, lower taxes and improve access to funding.
TD Cowen analyst Jaret Seiberg wrote that a move to Schedule III “would open the door for pharmaceutical companies to seek approval for more cannabis products, which could then be dispensed the same as other prescription drugs.”
Alliance Global Partners analyst Aaron Grey said in a note that this sets the stage for “additional states legalizing cannabis, safer banking being passed, and the ultimate uplisting of plant-touching cannabis stocks to major US exchanges.”
Reuters also highlighted that funding remains one of the sector’s biggest challenges as federal restrictions keep most banks and institutional investors out, forcing producers to rely on costly loans or alternative lenders.
CNBC reported that Tilray CEO Irwin Simon said, “I’m a lot more optimistic than I ever have been.”
Shawn Hauser, a partner at cannabis-focused law firm Vicente LLP, told CNBC that rescheduling would represent only a “partial victory,” as the sector will still need to fight for legalization.
She said the momentum can press Congress to build a regulatory framework that delivers broader changes around safety, access and criminal justice reform than rescheduling alone.
Hauser described this as “the beginning of a new era of public health policy” and said, “If implemented, it dismantles nearly a century of outdated drug policies that fly in the face of science and medicine,” according to CNBC.
Bloomberg pointed out that marijuana remains illegal at the federal level even though more than 40 states and the District of Columbia allow medical use and about half permit recreational use, based on data from the National Conference of State Legislatures.
Bloomberg said efforts to pass federal decriminalization have seen little progress.
The campaign to reclassify marijuana gained momentum under President Joe Biden after the Justice Department recommended shifting cannabis to Schedule III in 2024, triggering a DEA review that has since stalled amid legal challenges and agency delays.
Bloomberg also reported that opponents of reclassification argue the Biden administration relied on flawed reasoning and downplayed health risks.
CNBC reminded readers that, despite the latest surge, cannabis shares remain well below past peaks: Tilray recently traded at a little more than $10 after reaching more than $2,140, adjusted for splits, in September 2018.
