What Happened?
Shares of cannabis company Tilray Brands (NASDAQ: TLRY) jumped 3.2% in the morning session after the cannabis sector experienced a broad rally fueled by growing optimism for U.S. cannabis reform, further bolstered by a bullish update from a Jefferies analyst.
The positive sentiment is largely tied to reports that the Trump administration is considering reclassifying marijuana from its current Schedule I status to the less restrictive Schedule III category. This potential policy change could eliminate significant banking, tax, and operational hurdles for cannabis companies.
After the initial pop the shares cooled down to $1.42, up 0.7% from previous close.
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What Is The Market Telling Us
Tilray’s shares are extremely volatile and have had 66 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 1 day ago when the stock gained 18.6% on the news that Jefferies raised its price target on the stock amid growing optimism over a potential shift in U.S. federal cannabis policy. The investment bank Jefferies increased its price target for Tilray to $2.00 from $1.50, maintaining a Buy rating, based on the potential for cannabis to be rescheduled from a Schedule I to a Schedule III substance in the U.S.
This optimism follows comments from President Trump that his administration was reviewing the classification. While short of full legalization, such a shift would be a significant federal policy change. For cannabis companies, rescheduling could lead to substantial benefits, including lower tax burdens by allowing for normal business expense deductions and enabling easier research opportunities. Jefferies identified Tilray as potentially the "biggest potential beneficiary" from these regulatory developments. The positive sentiment has lifted cannabis stocks across the board, also fueled by renewed hopes for the passage of SAFE Banking legislation, which would grant cannabis firms access to traditional banking services.
Tilray is down 3.1% since the beginning of the year, and at $1.42 per share, it is trading 23.9% below its 52-week high of $1.86 from August 2024.
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