Weed Stocks Surge on Reports of Trump Administration Marijuana Reclassification
Cannabis stocks have experienced a significant rally following reports that the Trump administration may soon reclassify marijuana. This reclassification could transform the financial landscape for many struggling U.S. cannabis companies.
Potential Reclassification of Marijuana
The Washington Post reported that President Trump is expected to issue an executive order directing federal agencies to initiate the reclassification process. This news has been corroborated by several sources, leading to a surge in cannabis stock prices.
Market Reactions
As a result of these reports, the AdvisorShares Pure US Cannabis ETF, a key benchmark for American cannabis operators, saw a premarket increase of nearly 40%. Major Canadian cannabis firms like Tilray, Canopy Growth, and SNDL Inc. also witnessed gains of over 20%.
Expected Timeline
The anticipated executive order could be announced as soon as Monday, although a White House official cautioned that no final decisions have been made regarding marijuana’s rescheduling. In April 2024, the Department of Justice under President Biden had also suggested reclassification, but progress has been stalled since then.
Industry Perspectives
Dan Ahrens, manager of the AdvisorShares Pure US Cannabis ETF, expressed optimism, stating that there is now consistent support for reclassification. This comes after repeated speculations in the past regarding the administration’s stance on the issue. Ahrens emphasized that the current momentum signals that reclassification is a real possibility.
Impact on Cannabis Companies
- Reclassification would alleviate significant regulatory burdens on U.S. cannabis firms.
- Current challenges include restricted banking access, a burdensome tax code, and high debt levels without bankruptcy protections.
Shawn Hauser, a partner at the cannabis-focused law firm Vicente LLP, remarked that reclassifying marijuana could dismantle nearly a century of outdated drug policies. However, she noted that this would only be a partial victory; full legalization and addressing significant regulatory gaps remain essential.
Political Climate
While the cannabis industry has gained some advocates within Trump’s circle, Republicans traditionally hold more conservative views regarding reform. Recently, the party incorporated a ban on hemp-derived THC products into the latest funding bill.
In a meeting with cannabis executives and key health officials, President Trump engaged in discussions that appeared to lean toward favoring reclassification. Despite some skepticism from House Speaker Mike Johnson, the executives were able to present a compelling case, which Trump seemed open to.
Future of the Hemp Industry
Art Massolo, president of the US Hemp Roundtable, indicated that a change in marijuana classification might not significantly alter the hemp sector, particularly for THC-infused products. He suggested it could create a more favorable atmosphere for delaying certain regulatory bans.
