Tilray brand, 1 day
President Donald Trump is expected to issue an executive order allowing the reclassification of marijuana as soon as Monday, sources told CNBC. The person requested anonymity because he was not authorized to discuss White House plans.
Such a move would allow cannabis companies to qualify for different tax regimes, which would encourage investment.
Marijuana stocks rose in midday trading Friday following the CNBC report.
The Washington Post first reported Thursday that President Trump plans to use an executive order to direct federal agencies to reclassify marijuana from a Schedule I to a less regulated Schedule III drug. Axios reported that a possible reclassification of marijuana from a group that includes heroin to a lower tier of less dangerous drugs, such as Tylenol, which contains steroids and codeine, will occur early next year.
President Trump suggested reclassifying marijuana in August.
“In our assessment, it was not a ‘if’ but a ‘when’ that President Trump would reschedule marijuana,” Ed Groshans of middle market investment bank Compass Point wrote in a note to clients on Friday.
more optimism
Groshans said the reported changes are “positive” for the cannabis industry and will allow banks to better serve the cannabis industry.
He said that if President Trump orders the reclassification of marijuana, he expects the Drug Enforcement Administration to finalize proposed rules for the reclassification by the summer.
Bill Kirk, a senior research analyst at Ross, said he is also watching to see if the Supreme Court decides next week to hear cases on state regulations and federal marijuana prohibition. In this case, a favorable ruling for the industry could speed up the regulatory timeline.
The industry sees this move as a sign that cannabis is becoming more normalized under domestic law.
“I’m much more optimistic than I’ve ever been,” Tilray CEO Irwin Simon told CNBC.
Sean Hauser, a partner at cannabis law firm Vicente LLP, said the reclassification is only a “partial victory” because the cannabis industry needs to continue fighting for legalization. But he said the momentum could force Congress to create a regulatory framework around safety, access and criminal justice reform, potentially leading to broader changes than what the schedule change would provide.
“This is the beginning of a new era in public health policy,” Hauser said. “If enacted, it would dismantle nearly a century of outdated drug policies that run counter to science and medicine.”
Pot stocks have struggled since a brief frenzy among public growers and dispensaries in the pre-COVID-19 years, even as cannabis has become more widely accepted and some states have relaxed its classification.
Tilray stock recently traded for just over $10 after peaking at more than $2,140 split-adjusted in September 2018.
