Quick Read
- President Trump is expected to issue an executive order to reclassify marijuana as a Schedule III drug.
- Canopy Growth stock jumped 17% on the news, but the company remains unprofitable.
- Rescheduling would ease banking and tax restrictions on marijuana businesses, but would not legalize cannabis federally.
- The proposed change could take months to implement and is not guaranteed to drive long-term profits.
Trump’s Executive Move Ignites Weed Stock Rally
On Friday, the stock market witnessed a dramatic surge in marijuana-related shares, with Canopy Growth leading the charge. The catalyst? Reports from The Washington Post and confirmed by Investors.com that President Donald Trump is preparing to sign an executive order that would reclassify marijuana under federal law. For weed stocks, it was like a jolt of electricity running through a long-dormant sector.
Instead of treating marijuana like heroin or LSD, the proposed change would shift it to the same federal schedule as “common prescription painkillers” like Tylenol with codeine. While this isn’t outright legalization, it represents the most significant federal shift for marijuana policy in decades. The move, discussed with House Speaker Mike Johnson and corroborated by six unnamed sources, could happen as early as January—or perhaps within days, according to CNBC.
How Rescheduling Could Transform the Marijuana Industry
Rescheduling marijuana to Schedule III would not make it legal across the United States. But it would change the game for companies in the sector. Under current law, marijuana businesses face hurdles most industries never encounter: banks are reluctant to serve them, and they can’t deduct many standard business expenses from their taxes. This raises the cost of doing business and stifles growth.
If marijuana is rescheduled, banks would likely become more willing to offer loans and handle deposits for cannabis companies. Tax burdens could be eased. The regulatory environment would shift from suspicion to cautious acceptance. For investors, the hope is that all these changes will translate into more demand for legal marijuana and, ultimately, bigger profits for companies like Canopy Growth.
Canopy Growth: A Stock With Momentum, Not Profits
Canopy Growth (NASDAQ: CGC) became the face of the rally, surging 17% by midday Friday. The optimism was palpable, but a closer look reveals the challenges ahead. Marijuana has been legal in Canopy’s home country, Canada, since 2018. Yet, the company has never posted a profit. Last year, it lost $416 million. This raises a crucial question for investors: can regulatory relief alone turn this industry around?
Other cannabis players, including Tilray Brands, also saw their stocks rise on the back of these headlines. Investors.com reported Tilray’s improving technical strength and noted that broader cannabis stocks rallied following not just regulatory news, but also high-profile political comments—such as those from Vice President Harris and Germany’s legalization of cannabis.
The Hype Versus Reality: Risks Remain
While the rally grabbed headlines, the fundamentals haven’t changed overnight. Marijuana businesses have long struggled with thin margins, heavy taxes, and fierce competition. Even with friendlier banking and tax rules, profitability isn’t guaranteed. The sector’s history is littered with companies that soared on news, only to crash when profits failed to materialize.
Moreover, the executive order would only begin a bureaucratic process. Changing the drug’s classification could take months. During that time, regulations, legal challenges, and shifting political winds could all alter the landscape.
For now, however, the mood among investors is buoyant. The prospect of easier access to capital and lower taxes has injected new optimism into a sector that has often felt stuck in limbo.
Looking Ahead: A Defining Moment for Weed Stocks?
It’s too soon to tell if this is the dawn of a new era for marijuana businesses or just another short-lived rally. Investors with memories of previous surges—and subsequent disappointments—are watching closely.
The coming weeks will bring clarity. If President Trump follows through, the move could reshape not only the business landscape but the social perception of marijuana in the United States. Still, as Canopy Growth’s financials remind us, regulatory change is only one piece of a complex puzzle.
The weed stock rally is a story of hope, risk, and the unpredictable nature of political winds. For now, the market’s message is clear: even the hint of reform is enough to set this sector alight.
While the White House’s reported plan to reschedule marijuana has electrified weed stocks, the underlying industry fundamentals remain fragile. Investors should temper their excitement with caution, recognizing that regulatory relief alone won’t guarantee profitability for companies like Canopy Growth. The real test will be whether these policy changes can translate into sustainable business success.