Tilray Stock Surges 22% on White House Marijuana Rescheduling Buzz
Investors pile into the Canadian cannabis producer amid reports of an imminent U.S. policy shift, despite the company's indirect exposure to its immediate benefits.
Shares of Tilray Brands, Inc. (NASDAQ: TLRY) rocketed over 22% higher on Tuesday, ignited by fervent speculation that the White House is on the verge of a landmark decision to reschedule marijuana under federal law. The rally was backed by heavy trading volume as investors bet that a long-awaited policy shift could finally unlock the U.S. market, the world's largest for cannabis products.
The intense market interest centers on the potential reclassification of cannabis from a Schedule I to a Schedule III substance under the Controlled Substances Act. Such a move would represent the most significant federal cannabis reform in decades, signaling a departure from its classification alongside drugs like heroin. For U.S.-based cannabis companies, the change would be transformative, primarily by eliminating the punitive IRS tax code 280E, which currently prohibits them from deducting standard business expenses. This shift is seen as a critical step toward and improving the industry's financial viability.
However, the direct benefits to Tilray are more nuanced. As a Canadian company, Tilray does not currently operate cannabis businesses in the U.S. and therefore would not immediately gain from the tax relief afforded by the 280E repeal. Tilray's CEO, Irwin Simon, has previously stated that while rescheduling is a positive step for the industry, it . Instead, the company views it as a catalyst that could pave the way for future entry into the U.S. market upon federal legalization.
Despite the indirect nature of the catalyst, investors have repeatedly treated rescheduling news as a strong buy signal for Tilray and other cannabis stocks. The latest reflects a broad market sentiment that 'a rising tide lifts all boats,' anticipating that regulatory easing in the U.S. will ultimately benefit major players across North America. The move follows a recommendation from the Department of Health and Human Services (HHS) to the Drug Enforcement Administration (DEA) to proceed with the reclassification.
While the market's optimism is palpable, the final decision and its timing remain uncertain. The DEA has the final authority on rescheduling, and recent reports indicate the administrative process pending further review. For now, investors are closely watching for any official announcement from the White House, which could serve as the next major catalyst for the cannabis sector.