Quick Summary
- Shares of Tilray (TLRY) soared 14.2% Wednesday after reports indicated the Trump administration could reclassify marijuana
- An Axios report referenced a White House official suggesting the change might occur as early as Wednesday
- The reclassification would shift cannabis from Schedule I to Schedule III — placing it alongside medications like codeine-based Tylenol
- Competitor Canopy Growth (CGC) rose 21.1%, Curaleaf (CURLF) jumped 26.3%, and the MSOS ETF increased 19.4%
- While this wouldn’t federally legalize cannabis, it could facilitate banking services and expand medical research opportunities
Tilray shares had been trending upward earlier in the week, reaching $8 — representing more than a 30% increase from its annual low — before Wednesday’s development provided additional momentum.
The trigger was an Axios report that referenced a White House insider indicating the Trump administration was poised to reclassify cannabis as a Schedule III controlled substance. According to the report, this policy change could be announced as soon as Wednesday.
Currently, cannabis sits in the Schedule I category, positioned alongside substances like heroin and LSD. Moving it to Schedule III would place marijuana in the same classification as codeine-containing Tylenol — representing a significant downgrade in federal drug scheduling.
This potential action stems from an executive order President Trump issued in December, instructing the attorney general to fast-track the rescheduling procedure and broaden medical cannabis research. The original order didn’t specify any particular deadline.
Wednesday’s Axios coverage added urgency to the timeline. Financial markets reacted swiftly.
Tilray (TLRY) closed Wednesday’s session up 14.2%. Trading volume exceeded 28 million shares, dramatically higher than the 30-day average of just 2.8 million. This represented a tenfold increase in trading activity.
Canopy Growth (CGC) advanced 21.1%. Curaleaf (CURLF) — which operates primarily in the United States — rocketed 26.3% higher. The AdvisorShares Pure US Cannabis ETF (MSOS) rose 19.4% to $5.11, though it remains significantly below its February 2021 peak close of $55.05.
The Justice Department declined to comment on the Axios report when contacted.
The Real-World Impact of Rescheduling
Moving marijuana to Schedule III wouldn’t constitute full federal legalization. However, the practical implications would be substantial.
A major challenge facing cannabis companies has been access to banking services. Since marijuana remains federally prohibited, numerous financial institutions refuse to serve cannabis-related businesses. Rescheduling could alleviate this significant obstacle.
Additionally, it would expand opportunities for medical research, which has been severely restricted under marijuana’s current Schedule I designation.
For Tilray in particular, this development carries weight despite the company’s current absence from the US cannabis market. Tilray has publicly stated it’s awaiting more favorable regulatory conditions before launching American operations.
Tilray’s Latest Financial Results
Tilray’s latest quarterly earnings revealed cannabis revenue growth of 19% to $64.8 million, propelled by international sales, strategic acquisitions, and its dominant presence in the Canadian market.
The company has been diversifying through its alcoholic beverages division. Recent acquisitions include Brewdog, the UK’s leading craft beer brand, along with a strategic partnership agreement with Carlsberg.
Beverage segment revenue, however, totaled $43 million last quarter — declining from $56 million during the comparable period last year.
On the bottom line, net losses improved dramatically by 97% to approximately $2.4 million. The company’s internal cost-reduction program, dubbed “Project 420,” aims to drive further progress toward profitability.
Tilray and fellow Canadian cannabis producers have collectively lost billions throughout the past decade, following aggressive overexpansion after Canada legalized recreational marijuana in 2018.
Wednesday’s 14.2% single-session gain marked the stock’s strongest performance in recent months, with elevated trading volume demonstrating that investors viewed the rescheduling report as credible and significant.
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