Tilray Brands stock price has rebounded in the past three days, and chances are that the surge will accelerate as a new catalyst emerges. TLRY rose to $8.43, a few days after the company completed its reverse stock split. It has now jumped by 21% from its lowest point this month.
Trump to push for cannabis reclassification
Tilray stock price surged by over 30% in the extended hours after media reports suggested that Donald Trump was planning to push for the reclassification of cannabis as a less dangerous drug. Other cannabis stocks like Trulieve and Canopy Growth also surged.
According to Bloomberg, the president plans to direct his administration to move to reclassify cannabis, a process that Joe Biden, his predecessor, started a few years ago.
It will be an ironic situation if the deal goes through, as Donald Trump is a Republican, a party that has constantly become a stumbling block for the industry.
Bloomberg noted that the president had discussed that issue with top executives in the cannabis industry, many of whom contributed to his campaign. He also discussed the idea with Robert Kennedy, the Director of Health and Human Services, and Mehmet Oz.
Rescheduling cannabis from Schedule 1 would be a big thing for companies in the industry as it would remove some of the main challenges that they face currently.
For example, while cannabis is legal in many states, it has become difficult for companies in the industry to operate, especially in the financial sector as many banks don’t serve them.
Additionally, the move will make it easier to buy and sell cannabis in the country. Most importantly, it will help these companies simplify their taxes.
READ MORE: Tilray stock flirts with death cross amid Trump’s silence on cannabis reform
Long pathway to rescheduling
While Donald Trump’s support for rescheduling is important, it will not be an easy path, which explains why Joe Biden’s attempts failed.
For one, the president cannot reschedule a drug by executive order. Instead, the process has to go through the normal rule making process that has been on hold since January this year.
At the same time, his efforts may face the legal challenges that Biden faced, with opponents arguing that the process was flawed and downplayed health risks. In a statement earlier this year, Kennedy warned about the public health risks and called for more research.
Most importantly, Donald Trump may face political challenges as most Republicans and evangelical Christians remain opposed to such a move. MAGA political commentators like Tucker Carlson and the Late Charlie Kirk also voiced concerns about the reclassification push.
Tilray Brands stands to benefit
Tilray stock rose after the report because it would be one of the main beneficiaries of the move since it does not have a cannabis presence in the United States because of the regulatory issues.
The management has always insisted that it would only expand in the United States once regulations changed, which is now a possibility under Trump.
Tilray will likely have two main options in its US expansion. It may decide to sell its brands, which are already popular in Canada, to the country or use some of its cash to acquire existing companies, as it has over $600 million in cash.
Tilray has a long history with acquisitions, some of which have flopped. It acquired Aphria in 2021, a move that created the biggest cannabis company in the industry. Before that, it acquired Manitoba Harvest, and most recently, its buyouts were mostly in the beverage industry. It acquired SweetWater Brewing Company, Molson Coors, and three brands from Molson Coors.
What’s next for the Tilray stock?
Looking ahead, the most likely scenario is where the Tilray stock price surges as investors focus on the reclassification issue.
For example, the stock jumped from a split-adjusted low of $3.6 in July to $23 in October as Trump hinted at this reclassification. A similar move cannot be ruled out and the stock may surge to $20.
Another thing that cannot be ruled out is volatility, which may remain at an elevated level in the coming weeks.
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