Trump may significantly relax cannabis restrictions, cannabis stocks soar
Reports indicate that Trump is expected to sign an executive order as early as next Monday to reclassify cannabis from Schedule I to the more lenient Schedule III drug, which is expected to take effect early next year. Following the news, cannabis stocks surged significantly during Friday's trading session. Cannabis producer Tilray Brands soared 44%, while Canopy Growth skyrocketed 53%
The White House is preparing to significantly relax restrictions on "drugs" marijuana.
On December 12, media reports citing informed sources revealed that President Trump is expected to sign an executive order as early as next Monday to reclassify marijuana as a drug with looser regulations.
This policy will allow marijuana businesses to apply different tax rules and encourage investment in the industry. Following the news, marijuana stocks surged significantly during Friday's trading session.
Marijuana producer Tilray Brands soared 44%, and Canopy Growth skyrocketed 53%. The Amplify Seymour Cannabis ETF surged over 54%, marking the fund's best single-day performance ever.
Significant Adjustments to the Regulatory Framework
On Thursday, media reported for the first time that Trump is expected to direct U.S. federal agencies to reclassify marijuana from Schedule I to the more lenient Schedule III drugs.
Reports indicate that this potential reclassification would lower marijuana from the most strictly regulated category of drugs to a level comparable to steroids and lower-risk drugs like codeine-containing Tylenol, with implementation expected early next year.
Trump proposed changing the classification of marijuana as early as last August. Ed Groshans of the mid-sized investment bank Compass Point wrote in a report to clients on Friday:
In our assessment, the question is not whether Trump will rearrange the classification of marijuana, but when.
Groshans stated that the changes reported would be "positive" for the marijuana industry, allowing banks to provide services to the sector. He expects that if Trump orders the reclassification of marijuana, the Drug Enforcement Administration will establish proposed rules for reclassification before next summer.
Roth senior research analyst Bill Kirk mentioned that he is also watching whether the Supreme Court will decide next week to hear a case regarding state regulation versus federal prohibition of marijuana. A favorable ruling for the industry could accelerate the regulatory timeline.
Tilray CEO Irwin Simon told the media:
I am more optimistic than ever.
Since a brief frenzy during the pandemic, marijuana stocks have struggled, with Tilray's stock currently trading just above $10, compared to a peak of over $2,140 in September 2018 (adjusted for stock splits)
