Cannabis stocks surge as Trump is expected to ease restrictions
The United States in recent years has undergone a dramatic reconsideration of how it approaches the regulation of marijuana across large swaths of the country.
As of this year, 24 states, two territories and the District of Columbia have decriminalized marijuana for adult recreational use. Meanwhile, 40 US states have now legalized marijuana for medicinal purposes, whether or not it's been decriminalized for recreational use in their state.
But now the cannabis business in the US appears set to get a big boost from the most powerful person in the country.
According to a report from The Washington Post, President Trump is expected to order the federal government to significantly loosen its oversight of marijuana by reclassifying it as a Schedule III drug, which would put it on the same level of common prescription painkillers like Tylenol with codeine, as well as certain steroid and hormone treatments.
The Post cited six people familiar with the discussions.
Trump reportedly spoke to House Speaker Mike Johnson by phone on Wednesday, and was also joined by officials from the cannabis industry, as well as Health Secretary Robert F. Kennedy Jr. and Mehmet Oz, the head of the Centers for Medicare and Medicaid Services.
Trump would likely issue an executive order directing federal agencies to pursue reclassification of the drug, according to the Post.
Trump will not be decriminalizing marijuana, but by reclassifying the drug it will ease barriers to research, while also giving a "boost to the bottom lines" of legal cannabis businesses, as the Post notes.
This expected lift to the cannabis industry sent shares surging.
Marijuana producer Tilray Brands (TLRY) soared nearly 44.1% on Friday, while Canadian producer Canopy Growth Corporation (CGC) surged nearly 54%. Meanwhile, Innovative Industrial Properties (IIPR), a cannabis greenhouse operator, rose nearly 9%, while the Amplify Seymour Cannabis ETF (CNBS) shot up 54.6%.
Trump had hinted at perhaps taking action on the cannabis industry back in August. The Justice Department under President Biden had proposed a rule to reclassify marijuana based on the recommendation of federal health officials, and Trump had been asked whether his administration would follow through with what had been started under Biden.
“We’re looking at it. Some people like it, some people hate it,” Trump said. “Some people hate the whole concept of marijuana because it does bad for the children, it does bad for the people that are older than children.”
Shane Pennington, a Washington, D.C. attorney who represents two cannabis industry companies, told the Post that Trump cannot unilaterally reclassify marijuana, but he can order the Justice Department to bypass a pending administrative court hearing on the topic and instead issue a final rule on the topic.
Pennington told the Post that this would be the "biggest reform in federal cannabis policy" since the 1970s when marijuana was made a Schedule I drug.
Retail cannabis sales in the United States are expected to reach $56.9 billion by 2027, according to data from MJBiz Factbook. Medical marijuana sales are projected to reach $14.1 billion by the same year.
A final decision has not been made by the White House on reclassification, but the effort has gotten bipartisan support from both Republicans and Democrats, which could give the proposal more momentum.