Key Takeaways
- Tilray (TLRY) shares surged 14.2% Wednesday after reports indicated the Trump administration may reclassify marijuana
- An Axios article referenced a White House official suggesting the policy change could happen as early as Wednesday
- The reclassification would shift cannabis from Schedule I to Schedule III — equivalent to codeine-based medications
- Competitor Canopy Growth (CGC) climbed 21.1%, Curaleaf (CURLF) jumped 26.3%, and the MSOS ETF advanced 19.4%
- While not federally legalizing marijuana, the change could facilitate banking services and expand medical studies
Tilray shares had been experiencing upward momentum throughout the week, reaching $8 — representing a more than 30% increase from its annual bottom — before Wednesday’s development provided additional fuel.
The driving force was an Axios article that referenced a White House source indicating the Trump administration planned to reclassify cannabis as a Schedule III controlled substance. According to the report, the policy shift could be implemented as early as Wednesday.
Marijuana currently holds Schedule I classification, placing it alongside substances like heroin and LSD. Moving to Schedule III would categorize it similarly to codeine-containing medications — representing a significant downgrade in federal restrictions.
This development stems from an executive directive issued by President Trump last December, which instructed the attorney general to expedite the rescheduling procedure and broaden cannabis-related medical studies. The original order contained no definitive deadline.
Wednesday’s Axios coverage added urgency. The market reacted swiftly.
Tilray (TLRY) closed Wednesday’s session with a 14.2% gain. Trading volume exceeded 28 million shares, dramatically outpacing the 30-day average of approximately 2.8 million. That represents roughly a tenfold increase in activity.
Canopy Growth (CGC) posted a 21.1% advance. Curaleaf (CURLF) — a domestically-focused cannabis operator — skyrocketed 26.3%. The AdvisorShares Pure US Cannabis ETF (MSOS) rose 19.4% to $5.11, though it remains substantially below its February 2021 peak of $55.05.
The Department of Justice declined to provide commentary on the Axios reporting.
The Real-World Impact of Schedule III Status
Moving marijuana to Schedule III wouldn’t establish federal legality. However, it would create tangible benefits for the industry.
A major challenge facing cannabis operators has been access to banking services. With marijuana remaining federally prohibited, numerous financial institutions refuse to service cannabis-related businesses. Rescheduling could alleviate this obstacle.
Additionally, it would enable expanded medical research opportunities, which have been constrained under the current Schedule I designation.
For Tilray in particular, this development carries significance despite the company’s absence from the US cannabis market. Management has previously indicated they’re awaiting more favorable federal regulations before launching American operations.
Tilray’s Latest Financial Results
Tilray’s latest quarterly report revealed cannabis revenue climbing 19% to $64.8 million, fueled by international expansion, strategic acquisitions, and dominant market share in Canada.
The company has been diversifying through its alcoholic beverages division. Recent acquisitions include Brewdog, Britain’s top craft beer producer, alongside a strategic arrangement with Carlsberg.
Beverage segment revenue, however, registered $43 million last quarter — a decline from $56 million during the comparable year-ago period.
Regarding bottom-line performance, net losses improved dramatically by 97% to approximately $2.4 million. The company’s “Project 420” efficiency program aims to drive continued progress toward sustained profitability.
Tilray and fellow Canadian cannabis companies have accumulated billions in losses throughout the past decade, following aggressive expansion after Canada legalized recreational marijuana in 2018.
Wednesday’s 14.2% single-session gain marked Tilray’s strongest daily performance in recent months, with exceptional trading volume indicating investors viewed the rescheduling report as credible and material.
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