What Happened?
Shares of cannabis company Tilray Brands (NASDAQ: TLRY) jumped 7.8% in the morning session after the U.S. Senate was scheduled to vote on the confirmation of a new Drug Enforcement Administration (DEA) chief, a crucial step for advancing cannabis rescheduling.
The vote to confirm Terrance “Terry” Cole as the next DEA Administrator is a pivotal event for the cannabis industry. The DEA cannot formally move forward with the process of rescheduling cannabis from its current Schedule I status without a confirmed leader.
A confirmation could unlock the next steps, including a period for public comment and administrative reviews, potentially accelerating the path to reclassifying cannabis to the less-restrictive Schedule III.
This regulatory shift is a significant catalyst awaited by investors, as it would formally recognize cannabis's medical use and ease federal restrictions, benefiting companies like Tilray. The market's positive reaction reflects optimism that a confirmed DEA head will end the bureaucratic delays and move the rescheduling process forward.
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What Is The Market Telling Us
Tilray’s shares are extremely volatile and have had 55 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 5 days ago when the stock gained 17.8% on the news that the stock rallied on growing optimism regarding federal marijuana reform. The move comes as investors anticipate the potential reclassification of cannabis from a Schedule I to a Schedule III substance under federal law. Such a change would be a significant catalyst for the industry, as it would acknowledge the medical use of cannabis and could ease the severe tax burdens currently imposed on cannabis companies.
Tilray is down 56.9% since the beginning of the year, and at $0.63 per share, it is trading 69% below its 52-week high of $2.03 from July 2024.
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