The White House is preparing to significantly relax restrictions on cannabis, currently classified as a controlled substance.
On December 12, sources familiar with the matter revealed that U.S. President Donald Trump could sign an executive order as early as next Monday to reclassify cannabis as a less strictly regulated drug.
This policy shift would allow cannabis businesses to benefit from different tax rules and encourage investment inflows into the industry. Following the news, marijuana stocks surged during Friday's trading session.
Shares of cannabis producer Tilray Brands soared 44%, while Canopy Growth skyrocketed 53%. The Amplify Seymour Cannabis ETF surged over 54%, marking its best single-day performance on record.
**Major Regulatory Overhaul Expected**
Reports first emerged on Thursday that Trump is expected to direct federal agencies to reclassify cannabis from Schedule I to the less restrictive Schedule III category.
This potential reclassification would move cannabis from the most tightly controlled category—alongside hard drugs—to a lower-risk tier that includes steroids and codeine-containing medications like Tylenol. The change is anticipated to take effect early next year.
Trump initially floated the idea of reclassifying cannabis as early as August last year. Ed Groshans, an analyst at mid-sized investment bank Compass Point, wrote in a Friday client note:
"In our assessment, the question is not if but when Trump will reschedule cannabis."
Groshans stated that the reported changes would be "positive" for the cannabis industry, enabling banks to provide services to the sector. He expects the U.S. Drug Enforcement Administration (DEA) to finalize the proposed reclassification rules by next summer if Trump issues the order.
Bill Kirk, a senior research analyst at Roth, noted that he is also monitoring whether the Supreme Court will agree next week to hear a case concerning state-level cannabis regulation versus federal prohibition. A favorable ruling for the industry could accelerate the regulatory timeline.
Irwin Simon, CEO of Tilray, told media:
"I'm more optimistic than ever."
After a brief pandemic-driven frenzy, marijuana stocks have struggled. Tilray's shares currently trade just above $10, a far cry from their peak of over $2,140 (split-adjusted) in September 2018.
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