Key Takeaways
- Shares of Tilray (TLRY) climbed 14.2% Wednesday amid reports of potential cannabis reclassification by the Trump White House
- An Axios report referenced an administration source suggesting the regulatory change could be announced imminently
- The proposed shift would elevate cannabis from Schedule I to Schedule III — equivalent to prescription codeine products
- Competitor Canopy Growth (CGC) rallied 21.1%, Curaleaf (CURLF) jumped 26.3%, and the MSOS ETF advanced 19.4%
- While not full federal legalization, the change could facilitate banking relationships and expand medical studies
Shares of Tilray had been gaining momentum throughout the week, reaching $8 — representing more than a 30% increase from its annual bottom — before Wednesday’s development provided additional upward momentum.
The driving force behind the rally was an Axios article referencing a White House insider who indicated the Trump administration was poised to redesignate cannabis as a Schedule III controlled substance. The piece suggested an announcement could arrive as early as Wednesday.
Presently, cannabis sits in Schedule I classification, categorized with substances like heroin and LSD. Moving it to Schedule III would place it alongside prescription medications such as Tylenol with codeine — representing a significant regulatory downgrade.
This potential action stems from an executive directive President Trump issued in December, instructing the attorney general to fast-track the rescheduling procedure and broaden cannabis-related medical studies. That directive included no fixed deadline.
Wednesday’s Axios article added urgency to the timeline. Market participants reacted immediately.
Tilray (TLRY) closed trading up 14.2%. Trading volume exceeded 28 million shares, dramatically higher than the 30-day average of just 2.8 million. That represents a tenfold increase in investor interest.
Canopy Growth (CGC) posted a 21.1% gain. Curaleaf (CURLF) — which operates domestically — rocketed 26.3% higher. The AdvisorShares Pure US Cannabis ETF (MSOS) rose 19.4% to $5.11, though that figure remains substantially below its February 2021 peak of $55.05.
The Justice Department declined to comment on the Axios reporting.
The Real-World Impact of Rescheduling
Reclassifying cannabis wouldn’t establish federal legalization. However, it would create tangible changes for the industry.
Among the most significant challenges facing cannabis operators has been access to financial services. With marijuana maintaining federal illegality, numerous banks refuse to service cannabis enterprises. Rescheduling could alleviate this constraint.
Additionally, it would facilitate expanded medical research opportunities, which have been severely restricted under the current Schedule I designation.
For Tilray particularly, this development carries weight despite the company’s absence from the US cannabis market. Management has publicly stated it’s awaiting more favorable federal policies before launching American operations.
Tilray’s Current Financial Position
Tilray’s latest quarterly earnings revealed cannabis revenue growth of 19% to $64.8 million, powered by international expansion, strategic acquisitions, and dominant market share in Canada.
The organization has been diversifying through its alcoholic beverages division. Recent acquisitions include Brewdog, Britain’s premier craft brewery, alongside a collaborative agreement with Carlsberg.
Beverage segment revenue totaled $43 million in the most recent quarter — declining from $56 million in the comparable year-ago period.
Regarding profitability, the company’s net loss improved dramatically by 97% to approximately $2.4 million. Management’s “Project 420” efficiency program targets continued progress toward sustainable profits.
Tilray and fellow Canadian cannabis companies have accumulated billions in losses throughout the past decade, following aggressive expansion after Canada authorized recreational cannabis in 2018.
Wednesday’s 14.2% single-session advance marked the stock’s strongest performance in recent months, with exceptional volume indicating genuine market conviction in the rescheduling speculation.
