Key Takeaways
- Shares of Tilray (TLRY) surged 14.2% on Wednesday after reports emerged that Trump’s administration plans to reclassify cannabis
- An Axios report quoted a White House official indicating the policy change could be announced as early as Wednesday
- The reclassification would shift cannabis from Schedule I to Schedule III — equivalent to codeine-based medications
- Other cannabis stocks rallied sharply: Canopy Growth (CGC) up 21.1%, Curaleaf (CURLF) up 26.3%, and the MSOS ETF up 19.4%
- While not federal legalization, the change could enable banking access and expand medical research opportunities
Shares of Tilray had been gaining momentum throughout the week, reaching $8 — more than 30% above its yearly low — before Wednesday’s developments provided additional fuel.
The rally was triggered by an Axios report that cited a senior White House official revealing plans to reclassify marijuana as a Schedule III controlled substance. According to the report, the announcement could arrive as soon as Wednesday.
Currently, marijuana sits in Schedule I, the same classification as heroin and LSD. Moving it to Schedule III would place cannabis alongside medications like codeine-containing Tylenol — representing a significant downgrade in federal restriction.
This development builds on an executive order President Trump issued in December, which instructed the attorney general to fast-track the rescheduling process while expanding medical cannabis research. The original order included no firm deadline.
Wednesday’s Axios reporting changed that dynamic. Investors reacted immediately.
Tilray (TLRY) closed Wednesday’s session with a 14.2% gain. Trading volume exploded to over 28 million shares, dramatically exceeding the 30-day average of 2.8 million. That represents roughly ten times normal activity.
Canopy Growth (CGC) posted a 21.1% increase. Curaleaf (CURLF) — which operates exclusively in the United States — jumped 26.3%. The AdvisorShares Pure US Cannabis ETF (MSOS) rose 19.4% to $5.11, though it remains significantly below its February 2021 peak of $55.05.
The Justice Department declined to comment when asked about the Axios reporting.
The Real Impact of Rescheduling
Moving cannabis to Schedule III wouldn’t establish federal legalization. However, the practical implications would be substantial.
Banking access represents one of the industry’s most significant challenges. Since marijuana remains federally prohibited, most financial institutions refuse to serve cannabis businesses. Rescheduling could alleviate this major obstacle.
Additionally, the change would facilitate expanded medical research, which has faced severe restrictions under the current Schedule I designation.
For Tilray, this news carries weight despite the company’s absence from the US cannabis market. Management has publicly stated they’re awaiting improved regulatory conditions before launching American operations.
Tilray’s Operating Performance
Tilray’s latest quarterly filing revealed cannabis revenue climbing 19% to $64.8 million, propelled by international expansion, strategic acquisitions, and dominant Canadian market position.
The company has simultaneously developed its alcoholic beverages division as a complementary revenue source. Recent acquisitions include Brewdog, Britain’s leading craft brewery, alongside a strategic alliance with Carlsberg.
However, beverage revenue declined to $43 million last quarter — a drop from $56 million during the comparable prior-year period.
Regarding profitability, net losses narrowed dramatically by 97% to approximately $2.4 million. The company’s “Project 420” cost-reduction program aims to drive continued progress toward sustained profitability.
Tilray and other Canadian cannabis operators have accumulated billions in losses throughout the past decade, stemming from aggressive overexpansion following Canada’s 2018 recreational legalization.
Wednesday’s 14.2% single-session gain marked the stock’s strongest performance in recent months, with exceptional trading volume indicating investors viewed the rescheduling news as credible and significant.
