After many false starts, investors are once again betting that marijuana businesses are close to seeing federal restrictions ease. This time, the odds may be better.
President Donald Trump on Monday acknowledged that the White House is considering reclassifying marijuana and other cannabis products as a Schedule III controlled substance, a move that would put them on par with many prescription drugs and could save U.S. cannabis companies millions of dollars per year in taxes. Marijuana is currently classified as a Schedule I drug, alongside substances such as heroin and ecstasy.
Shares of marijuana stocks jumped on Tuesday, with Tilray Brands up 27.5% and Canopy Growth up 10.2%, compared to the S&P 500’s 0.2% drop. The AdvisorShares Pure U.S. Cannabis ETF is up 20.6% from last Friday, following reports that Trump is considering reclassifying marijuana by executive order.
Investors in marijuana stocks have seen this story before.
On Oct 6, 2022, the AdvisorShares Pure U.S. Cannabis ETF rose 34% as Biden instructed then Attorney General Merrick Garland to review marijuana’s classification. On Sept. 9, 2024, the first trading day after Trump said he would support rescheduling marijuana in a Truth Social post, the ETF rose 11%. On Aug. 11, 2025, the ETF soared 26% after Trump told reporters he’d soon decide on the drug.
“Because a lot of people want to see it, the reclassification, because it leads to tremendous amounts of research. It can’t be done unless you reclassify. So we are looking at that very strongly,” Trump said in the Oval Office on Monday.
The White House didn’t respond to a request for comment on Tuesday. A White House official on Friday said no final decision had been made.
There’s reason to think Trump might move forward with his order. Politically, easing restrictions on marijuana use could resonate with younger voters, a group that helped propel Trump to victory in the 2024 election.
While Trump’s comments might seem out of the blue, they’re actually in part the culmination of a years-long process begun under the Biden administration to loosen restrictions. In May 2024, the U.S. Drug Enforcement Administration published a proposed rule to reclassify marijuana and solicited public comment.
The agency planned to hold hearings on the issue earlier this year, but they were delayed amid the transition to the new administration, with Republicans remaining divided on the issue. Trump’s executive order would presumably resume the hearing process.
The benefits of Trump rescheduling the drug would be limited. Selling cannabis in most cases would still be illegal under federal law, as would interstate commerce. After a rescheduling, cannabis companies could deduct some business expenses from taxes, a change that could save the top 12 U.S. cannabis companies about $800 million a year, according to Viridian Capital Advisors. Rescheduling would also make it easier for academics to do research on the effects of cannabis.
Rescheduling the drug could pave the way for additional changes that would make it easier for cannabis companies to do business in the U.S.
Even though some states have legalized marijuana businesses, many banks still refuse to provide financial services to the industry while cannabis remains illegal under federal law. A bipartisan group of lawmakers has sponsored legislation that would give banks a safe harbor to lend to state-legal cannabis companies, and such a bill could gain momentum with the president’s backing, Compass Point Research & Trading analyst Ed Groshans wrote in a research note.
“Rescheduling is not the whole enchilada but it would be a big deal,” wrote analysts for Beacon Policy Advisors in a research note this week. “The momentum these changes would bring would itself be an ‘important domino’ in advancing other reforms.”
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