Cannabis stocks spike on reports Trump plans to ease federal pot restrictions

Core Viewpoint - Cannabis stocks experienced a significant surge following reports that President Trump is preparing to reclassify marijuana under federal law, which could ease restrictions and revitalize the industry [1][8]. Industry Impact - The rally represents one of the largest single-day increases for cannabis stocks in years, breaking a prolonged slump that had left many stocks trading at a fraction of their 2021 highs [2][11]. - Reclassifying cannabis from Schedule I to Schedule III under the Controlled Substances Act would acknowledge its medical use and reduce federal barriers that have hindered cannabis companies for years [8][14]. Company Performance - Tilray Brands saw a notable increase, trading at $11.85, up $3.42 or over 40%, although it remains below its 52-week high of $23.20 [4]. - Canopy Growth rose approximately 50% to around $1.70 per share, with trading volume exceeding 117 million shares [5]. - Curaleaf increased by 38% to $3.71 per share, while Aurora Cannabis climbed nearly 18% to about $5.35 per share [5]. Market Indicators - The AdvisorShares Pure US Cannabis ETF, a key indicator for the domestic cannabis industry, jumped more than 50% to around $5.71, nearing its 52-week high of $6.02 after being around $2 earlier this year [5]. - Despite the recent surge, broad cannabis indices remain down over 90% from their pandemic-era peaks, indicating ongoing volatility in the sector [11]. Regulatory Context - Current federal law classifies marijuana as a Schedule I drug, placing it alongside substances like heroin and LSD [6]. - Schedule III status would facilitate medical research, allow cannabis businesses to deduct ordinary expenses, and improve access to banking and institutional capital [9][14]. - Any reclassification would require a rulemaking process involving agencies such as the Drug Enforcement Administration, and no final decisions have been made yet [12]. Investor Sentiment - The sustainability of the recent rally depends on whether Trump will issue a formal order and the speed of regulatory changes [15]. - The surge in cannabis stocks marks a rare moment of optimism for an industry that has faced significant challenges over the past three years [15].