Key Takeaways
- Shares of Tilray (TLRY) rallied 14.2% on Wednesday after reports surfaced about potential cannabis rescheduling by the Trump administration
- An Axios report quoted a White House insider suggesting the announcement could arrive as early as Wednesday
- The proposed change would shift cannabis from Schedule I to Schedule III classification — 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 creating federal legalization, the rescheduling could unlock banking services and expand medical studies
Shares of Tilray had been gaining momentum throughout the week, reaching $8 — representing more than a 30% increase from its annual bottom — before Wednesday’s developments provided additional upward momentum.
The driving force behind the rally was an Axios article referencing a White House insider who revealed the Trump administration’s plans to reclassify cannabis to Schedule III status. According to the source, the announcement could materialize as soon as Wednesday.
Currently, cannabis sits in Schedule I classification, placing it alongside substances like heroin and LSD. Moving it to Schedule III would align it with medications such as codeine-containing Tylenol — representing a significant downgrade in federal restriction levels.
This potential action stems from a December executive order issued by President Trump, which instructed the attorney general to fast-track the rescheduling procedure and broaden cannabis medical research capabilities. The original order contained no definitive timeline.
Wednesday’s Axios article added urgency to the situation. Investor reaction was immediate.
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. This represented a tenfold increase in market participation.
Canopy Growth (CGC) posted a 21.1% advance. Curaleaf (CURLF) — operating primarily in the United States — skyrocketed 26.3%. The AdvisorShares Pure US Cannabis ETF (MSOS) rose 19.4% to reach $5.11, though still trading substantially below its February 2021 peak of $55.05.
The Justice Department declined to comment when contacted regarding the Axios reporting.
The Real Impact of Schedule III Classification
Moving cannabis to Schedule III wouldn’t establish federal legalization. However, the practical implications would be significant.
Banking access represents one of the most pressing challenges facing cannabis operators. With marijuana still federally prohibited, numerous financial institutions refuse to service cannabis-related businesses. Rescheduling could alleviate this obstacle.
Additionally, the change would facilitate expanded medical research opportunities, which have been severely constrained under the current Schedule I designation.
For Tilray particularly, this development carries weight despite the company’s absence from the US cannabis market. Management has publicly stated it’s awaiting improved 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 expansion, strategic acquisitions, and dominant market share in Canada.
The company has been diversifying through its alcoholic beverages division as an alternative revenue channel. Recent acquisitions include Brewdog, Britain’s premier craft brewery, plus a strategic alliance with Carlsberg.
Beverage segment revenue totaled $43 million in the recent quarter — representing a decline from $56 million during the comparable prior-year period.
Regarding bottom-line performance, net losses improved dramatically by 97% to approximately $2.4 million. The company’s “Project 420” cost reduction program targets further progress toward sustained profitability.
Tilray alongside other Canadian cannabis producers have accumulated billions in losses throughout the past decade, following aggressive expansion strategies after Canada enacted recreational legalization in 2018.
Wednesday’s 14.2% single-session advance marked Tilray’s strongest daily performance in months, with exceptional volume levels indicating the market’s serious consideration of the rescheduling speculation.
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