Cannabis Stocks Experience Dramatic Rally on Trump Rescheduling Reports
Shares of major marijuana companies are experiencing a significant surge today following reports that President Donald Trump could soon sign an executive order altering cannabis's legal status at the federal level. According to the Trump administration's plan, initially reported by Axios, marijuana would be reclassified from Schedule I to Schedule III, placing it alongside common prescription painkillers rather than substances like cocaine and heroin.
Market Reaction and Historical Context
The market response has been immediate and substantial. Canopy Growth (CGC) shares have jumped more than 20 percent, while Tilray Brands (TLRY) has gained 15 percent and Aurora Cannabis (ABC) has risen approximately 10 percent. The AdvisorShares Pure US Cannabis exchange-traded fund (MSOS) has also seen impressive growth, climbing nearly 20 percent in today's trading session.
This dramatic movement follows years of disappointing performance for cannabis stocks, which previously experienced a similar surge during Trump's first administration when investors anticipated rescheduling that ultimately never materialized. The current developments represent renewed hope for a sector that has long struggled under federal prohibition despite widespread state-level legalization.
Policy Implications and Administration Actions
Reclassifying marijuana would constitute one of the most substantial changes to federal drug policy in decades, fundamentally altering how cannabis is treated under U.S. law. This shift would eliminate significant barriers for researchers investigating legitimate medical applications for marijuana and transform the legal landscape for cannabis businesses nationwide.
The potential executive order follows previous administration moves toward cannabis policy reform. In December, Trump signed an executive order directing the Department of Justice to begin preparing federal regulations for marijuana reclassification. "I don't want it, okay," Trump stated at the time. "I'm not gonna be taking it. But a lot of people do want it. A lot of people need it."
This development comes just days after Trump signed another executive order easing access to psychedelic drugs for medical research purposes, indicating a broader pattern of drug policy reform initiatives from the administration.
Industry Challenges and Potential Benefits
Cannabis stocks have generally performed poorly as investments for years, despite cannabis products being legalized or decriminalized in 46 states. The current prohibition creates substantial challenges for cannabis businesses, even in states where marijuana is legal. Companies growing and selling cannabis products technically violate federal law by trafficking in a Schedule I substance.
While the Department of Justice has generally refrained from prosecuting these businesses in states with legal cannabis, IRS tax regulations prevent them from accessing conventional financing sources or claiming essential tax deductions and credits. A downgrade to Schedule III would resolve these tax complications and provide companies with improved financing and investment opportunities.
Company Performance and Market Dynamics
Many prominent cannabis stocks originate from Canadian companies or began operations in Canada, which became the first major nation to legalize recreational cannabis nationwide in October 2018. Tilray Brands exemplifies the sector's struggles, having lost approximately 99 percent of its value between its September 2018 peak and mid-2025, only showing recent improvement as the Trump administration renewed discussions about marijuana rescheduling.
"The reclassification to Schedule III will have a material impact on the valuation of cannabis stocks," noted Matt Karnes, founder of cannabis industry financial analysis firm GreenWave Advisors, highlighting the potential transformation awaiting the sector.
Administration Progress and Current Status
Trump's December executive order specifically directed the Drug Enforcement Agency to undertake preparatory work for marijuana rescheduling. However, analysts report limited progress since that directive, with even Trump expressing frustration about the delays. "Will you get the rescheduling done, please?" Trump asked on Saturday, apparently addressing White House officials directly about the matter.
While today's reports have generated substantial optimism among cannabis investors, market participants are advised to proceed with appropriate caution, given the sector's historical volatility and the uncertainty surrounding final policy implementation.
