What Happened?

Shares of cannabis company Tilray Brands (NASDAQ: TLRY) jumped 38.5% in the afternoon session after reports that President Donald Trump is considering reclassifying marijuana as a less dangerous drug, a move that could transform the cannabis industry's regulatory landscape. 

The potential move, first reported by The Wall Street Journal and later confirmed by President Trump, would reclassify marijuana from its current status as a Schedule I substance, easing federal restrictions on the industry. At a press conference, the President stated he is “looking at reclassification” and will make a determination “over the next few weeks.” For cannabis companies, this change could be a game-changer. A key benefit would be relief from Internal Revenue Code Section 280E, which currently prohibits companies dealing with Schedule I substances from taking normal business deductions. This tax relief would significantly improve profitability. The optimism spread across the sector, with peers like Canopy Growth and Cronos Group also seeing their shares surge, reflecting broad investor hope for federal reforms.

After the initial pop the shares cooled down and closed the day at $0.92, up 41.8% from previous close.

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What Is The Market Telling Us

Tilray’s shares are extremely volatile and have had 59 moves greater than 5% over the last year. But moves this big are rare even for Tilray and indicate this news significantly impacted the market’s perception of the business.

The previous big move we wrote about was 4 days ago when the stock gained 4.9% on the news that the company announced the launch of its new Humble Seed Whole Wheat Protein Crackers, now available at Whole Foods Market. This move marked a notable expansion of the company's wellness product offerings into a major retail chain. The positive sentiment also followed other recent events. Earlier in the week, an analyst upgraded the stock to a "Buy" rating, and at the end of July, CEO Irwin D. Simon purchased 165,000 shares. This insider purchase signaled strong confidence in the company's direction.

Tilray is down 34.2% since the beginning of the year, and at $0.96 per share, it is trading 50.8% below its 52-week high of $1.95 from August 2024.

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