By Cannabis stocks roared back to life Friday after reports indicated that President Donald Trump intends to move marijuana out of the federal government’s most restrictive drug category early in the new year, igniting one of the sector’s sharpest rallies in years.
Shares of Tilray Brands led the charge, jumping 33% during regular trading before climbing as high as 37.6% in after-hours activity. Canopy Growth surged 23%, while Innovative Industrial Properties, a U.S.-focused cannabis real estate investment trust, rose more than 6%. The Amplify Seymour Cannabis ETF, which tracks a basket of marijuana-related companies, soared more than 19% in a single session, according to CNBC.
The rally followed separate reports from The Washington Post and Axios that the incoming Trump administration plans to reclassify marijuana from Schedule I to Schedule III under the Controlled Substances Act. Marijuana is currently grouped with drugs such as heroin under Schedule I, a designation reserved for substances deemed to have no accepted medical use and a high potential for abuse.
A move to Schedule III would place cannabis alongside drugs such as anabolic steroids and certain codeine formulations, formally recognizing accepted medical use and a lower abuse risk than Schedule I or II substances. The change would carry sweeping implications for the industry, including relief from punitive tax rules, expanded access to banking services, and greater latitude for states that have already legalized marijuana in some form.
“Trump rescheduling marijuana was not an if, in our assessment, but a when,” Compass Point analyst Ed Groshans wrote in a note to clients Friday morning. He described the anticipated shift as “positive” for the sector and said that if the order is issued in January, the Drug Enforcement Administration could complete the reclassification process by the summer of 2026.
The reports mark a notable policy evolution for Trump, who previously signaled openness to rescheduling marijuana during an August interview. While the president has not publicly detailed the mechanics or timing of such a move, the prospect alone was enough to send investors rushing back into a sector that has been battered for years by regulatory uncertainty.
Despite widespread public support for legalization and state-level reforms across much of the country, cannabis stocks have struggled mightily. Prior to Friday’s surge, Tilray shares were down 36% for the year, and the CNBS ETF was on track for its fifth straight annual loss. Many companies have been squeezed by limited access to capital, high taxes, and the ongoing disconnect between state legalization and federal prohibition.
Adding to investor interest is a pending Supreme Court decision expected as early as next week on whether the justices will take up a case challenging that federal-state conflict. Analysts say a decision to hear the case—or signals pointing toward eventual resolution—could further accelerate momentum toward broader regulatory reform.
For now, markets are reacting to the clearest sign yet that Washington may finally ease its grip on an industry that has long operated in legal limbo. Friday’s dramatic rally underscored just how sensitive cannabis stocks remain to any hint of federal action, offering a rare moment of optimism for investors who have endured years of disappointment since the first wave of public listings in 2018 and 2019.
Whether the gains prove durable will depend on follow-through from the administration and the pace of regulatory change. But for a single trading day, at least, cannabis reclaimed the spotlight—buoyed by the possibility that long-awaited federal reform may finally be within reach.
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