Weed stocks rally on reports that Trump admin is close to reclassifying marijuana

Cannabis stocks are rallying on a series of reports that the Trump administration is close to reclassifying marijuana, a move that would instantly make a group of battered US weed companies more profitable.

The Washington Post first reported Thursday evening that President Trump is expected to issue an executive order that directs federal agencies to pursue reclassification. Several other publications confirmed that reporting.

Cannabis stocks have soared on the reports. AdvisorShares Pure US Cannabis ETF, a benchmark for US cannabis operators, is up nearly 40% in premarket trading. Canadian weed companies Tilray, Canopy Growth, and SNDL Inc. are up more than 20% as well.

The order could come as soon as Monday, CNBC reported. A White House official told Reuters that “no final decisions have been made on the rescheduling of marijuana.”

Under former President Biden, the Department of Justice announced in April 2024 that it would recommend reclassifying marijuana, though that process was bogged down. The recent reports are not the first (or second or third) time that the Trump administration has been rumored to be considering reclassification.

Dan Ahrens, manager of the AdvisorShares Pure US Cannabis ETF, said, “This is the most confident we’ve been.” He added that what’s different now is that “support has been building steadily rather than appearing in isolated headlines,” pointing to August remarks Trump made saying his administration is “looking at reclassification.”

“Taken together, those actions send a consistent signal that rescheduling is not hypothetical,” Ahrens said. “It is actively on the table.”

Reclassifying marijuana does not mean it can be sold in every state, but it would lift some regulatory burdens that weigh on US cannabis companies’ margins. American cannabis operators struggle with limited access to banking, an unfriendly tax code, and high levels of debt without the benefit of bankruptcy protections.

“If implemented, it dismantles nearly a century of outdated drug policies that fly in the face of science and medicine,” said Shawn Hauser, a partner at Vicente LLP, a law firm that caters to the cannabis industry.

“However, this would be only a partial victory; legalization and the resolution of fundamental regulatory gaps remain the urgent work ahead.”

While the weed industry has some supporters in Trump’s orbit, Republicans have historically been more aligned with moral arguments against reform. In the most recent funding bill passed last month, Republicans slipped in a ban on hemp-derived THC products.

According to the Post, the president met with cannabis industry executives on Wednesday along with Health and Human Services Secretary Robert F. Kennedy and Centers for Medicare and Medicaid Services chief Mehmet Oz.

During that meeting, he called House Speaker Mike Johnson, who was skeptical of the idea. The executives pushed back and Trump appeared convinced, the Post reported.

Art Massolo, president of the US Hemp Roundtable, noted that reclassifying marijuana wouldn’t do much for the hemp industry behind the THC seltzers that have grown in popularity in recent years. It “maybe gives hemp a halo effect to make it a little bit easier to delay the McConnell hemp ban,” he said in an email.