Cannabis stocks and ETFs saw significant gains on Monday following indications that US President Donald Trump is contemplating a shift in marijuana’s legal classification. Currently listed as a Schedule I substance alongside heroin and cocaine, it could soon be reclassified to Schedule III. This would enable cannabis businesses to access standard tax deductions and credits, improve their banking access, and facilitate more medical research opportunities. Trump mentioned this consideration at a recent fundraiser and reiterated his administration’s focus on the issue, with a decision anticipated in the coming weeks.
This news ignited a notable rally in the cannabis sector. Trulieve Cannabis Corp. surged by 35%, while Tilray and Curaleaf Holdings jumped by 32% and 29%, respectively. CANOPY Growth also saw a notable rise of 24%. Other companies like Nevis Brands and SNDL each gained 17%, with Aurora Cannabis increasing by 15% and Cronos Group adding almost 14%.
Turning to ETFs, the Roundhill Cannabis ETF (Weed) rose impressively by 29.4%. Following this, the Amplify Seymour Cannabis ETF (CNBS) increased by 27.8%, with Amplify Alternative Harvest ETF (MJ) at 25.7%. Advisorshares Pure US Cannabis ETF (MSOS) and Advisorshares Pure Cannabis ETF (Yolo) also saw rises of 24.3% and 25.7%, respectively. If the reclassification goes through, this momentum might persist for some time.
The proposed change to Schedule III could significantly boost the cannabis market, especially in states where it’s recently been legalized. This classification would ease banking restrictions, giving businesses better access to financial services and attracting investments. It could also lessen tax burdens, shift public perceptions, and promote broader acceptance of marijuana, particularly as a medical option.
Moreover, a shift in classification could encourage more states to consider legalizing cannabis for healthcare or recreational use, reflecting a change in how the federal government views the potential risks and benefits of these substances. Currently, nearly 40 states in the US have legalized marijuana in different capacities.
Shifting marijuana to Schedule III may establish clearer regulatory frameworks for cannabis businesses, contributing to enhanced product quality and safety across the industry.
