Shares of cannabis companies soared in premarket trading 60 days ago fueled by news that President Donald Trump intends to direct federal agencies to reclassify marijuana as a less dangerous substance, potentially unlocking new opportunities for the industry.
Tilray Brands, a leading marijuana producer, skyrocketed more than 40% ahead of the market open, while rival Canopy Growth climbed 27%.
Innovative Industrial Properties, which operates cannabis facilities, rose over 5%, and the Amplify Seymour Cannabis ETF (CNBS) jumped more than 26%.
According to reports from The Washington Post and Axios, Trump is poised to issue an executive order instructing agencies to shift marijuana from its current Schedule I status—alongside substances like heroin and LSD, which are deemed to have no accepted medical use and high abuse potential—to Schedule III, a category for drugs with moderate dependence risk and recognized therapeutic value, such as ketamine, anabolic steroids, and Tylenol with codeine.
The change, expected to roll out in early 2026, would not legalize recreational marijuana federally but could alleviate burdensome tax rules under IRS Section 280E, facilitate interstate transport of products, and improve access to banking services for licensed operators.
Trump first signaled openness to reclassification in August 2025, stating during a White House briefing that his administration was reviewing the issue and aimed to decide within weeks. Recent discussions reportedly involved a December 10 call with House Speaker Mike Johnson—who voiced opposition—alongside cannabis executives, Health Secretary Robert F. Kennedy Jr., and Centers for Medicare and Medicaid Services head Mehmet Oz.
While the White House has emphasized that no final decisions have been reached, industry observers view the momentum as a breakthrough.
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Analyst Groshans described the potential shift as “positive” for the sector, predicting it would accelerate banking access and empower states to oversee regulation more effectively. If enacted in January, he expects the Drug Enforcement Administration to complete rulemaking by summer 2026.
Roth senior research analyst Bill Kirk is also watching a pending Supreme Court case on reconciling state cannabis laws with federal prohibitions, with a decision possibly due next week. A favorable outcome could further expedite reforms.
Despite growing public acceptance—with over 40 states permitting medical use and about half allowing recreational—the cannabis market has faced headwinds since many firms went public around 2018. Tilray’s stock had declined 36% year-to-date prior to Friday’s rally, and the Amplify Cannabis ETF remains headed for an 8% loss in 2025, extending its streak of annual declines to five.