NEW YORK (AP) — Cannabis companies like Tilray Brands and Canopy Growth could soon face a more mellow path ahead following President Donald Trump’s move to help reclassify the drug’s status.
The companies had a mostly muted reaction to Trump’s executive order, though the sector has been gaining ground since last week in anticipation of the move. Trump’s executive order would speed up the Drug Enforcement Administration’s process that would shift the drug’s current classification as a Schedule I drug, alongside heroin and LSD. Cannabis would instead be a Schedule III substance, like ketamine and some anabolic steroids.
The move could spark momentum for an industry that has been struggling under a hodgepodge of state regulations and the constant threat of harsh enforcement of federal laws.
Tilray Brands slipped 4.2% to $12.33 following the executive order. The stock is well below its price of $17 when it went public in 2008. Still, it has gained more than 50% in December in anticipation of Trump’s executive order.
Canopy Growth, which trades on the Toronto Stock Exchange, fell 12.5%, but is up more than 40% in December.
Curaleaf Holdings, which also trades on the Toronto Stock Exchange, fell 32% on Thursday, but is still up more than 30% for December.
Roundhill Investments’ electronically-traded fund for cannabis companies fell 26.8% on Thursday, but is also up more than 40% for December.
Cannabis stocks have been slumping for the last few years. While many states loosened regulations for the sale and consumption of the drug, federal laws remained as a barrier to operations and expansion for many companies. A reclassification by the DEA doesn’t necessarily make it legal for recreational use, but it does soften regulations surrounding the drug.
The regulatory shift could reduce the tax burden for marijuana businesses, while also making it easier to research marijuana, such as in clinical studies. Financial institutions have kept their distance from marijuana businesses because of the strict regulations and a shift could mean more access to banks, investments and loans for the industry.
