Tilray stock price popped by nearly 30% on Tuesday as Donald Trump prepared to sign an executive order that would reschedule cannabis into a lower drug classification.
It jumped to a high of $14.40, up by 110% from its lowest level this month, bringing its market capitalization to $1.62 billion. It has also formed a bullish engulfing pattern, pointing to more gains in the near term.
Donald Trump to reschedule cannabis
Tilray Brands stock price has popped this year, helped by the rising hope that Donald Trump will complete the work that Joe Biden started.
Media reports say that the president will sign an executive order that will reschedule Marijuana from a Schedule 1 drug to Schedule 3. The DEA defines a Schedule 3 drug as one with a moderate to low potential for physical and psychological dependence.
A complete rescheduling will ease federal restrictions and make it easier for customers to buy cannabis and move it across state lines. It would also make it easier for companies in the cannabis industry to do business in the country.
Still, the executive order itself will not do that as the decision will need to follow a long process that started during Joe Biden’s administration.
The process was moving ahead when Donald Trump became president, but has largely stalled amid several lawsuits.
READ MORE: Tilray stock price pumps after latest Trump cannabis reclassification news
Trump’s decision came as a group of bipartisan senators continued deliberating on cannabis banking issues. The talks are part of the Secure and Fair Enforcement Regulation (SAFER) Banking Act.
These talks are being led by Catherine Cortez Masto of Nevada and Thom Tillis of North Carolina. In a statement, Ortez said:
“Even if the president reschedules marijuana, that will not address the limits on banking services that are harmful for our Nevada cannabis growers and retailers, as well as others in the cannabis industry across the nation.”
Tilray Brands would be a major beneficiary if cannabis regulations improve in the United States, a country it does not sell its cannabis product in.
In the past, the management has hinted that a friendly regulatory regime would help it set up operations there, expanding its business in one of the biggest markets. In the recent earnings report, the CEO said:
“I am confident in Tilray’s ability to seize the transformative opportunities ahead, especially as the U.S. explores cannabis rescheduling and the European cannabis landscape continues to evolve.”
The company also has a strong balance sheet that may help it to engineer an acquisition in the United States. It ended the last quarter with $264 million in cash and equivalents and $107 million in account receivable.
Still, the main risk the stock faces is that investors may sell the news once Trump signs the executive order on Thursday.
Selling the news is a situation where investors dump an asset after a major event happens. In this case, they may sell it because the rescheduling process will be long and face some legal challenges.
Tilray stock price technical analysis
TLRY stock chart | Source: TradingView
The daily timeframe chart shows that the TLRY stock price bottomed at $7 earlier this month and then bounced back to a high of $14.4 as the rescheduling hype continued.
It formed an up-gap, and on Tuesday, it formed a bullish engulfing chart pattern, which happens when a big bullish candle covers a smaller bearish one.
Tilray stock has moved above the 50-day and 100-day Exponential Moving Averages (EMA), which is a highly bullish sign in technical analysis.
Therefore, the stock will likely continue rising ahead and after the rescheduling process starts. This rebound may see it jump to the key resistance level at $20. It will then pull back after that as investors sell the news and chartists attempt to fill the gap formed on December 11.
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