Cannabis stocks surge on report Trump seeks to ease restrictions

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Dec 12 (Reuters) – Shares of cannabis companies jumped on Friday after the Washington Post reported U.S. President Donald Trump is expected to push the government to dramatically loosen federal restrictions on marijuana.

U.S.-listed shares of Tilray Brands gained 35%, while SNDL, Canopy Growth and ETF AdvisorShares Pure US Cannabis were up between 20% and 31% in morning trading.

Trump is expected to issue an executive order as soon as Monday that would allow for reclassification of weed, CNBC reported, citing a source familiar with the matter.

“No final decisions have been made on the rescheduling of marijuana,” a White House official said.

Trump plans to direct agencies to reclassify marijuana as a Schedule III drug, the Washington Post reported on Thursday, reducing oversight of the plant and its derivatives to the same level as some common prescription painkillers and other drugs.

“We believe this would open the door for pharmaceutical companies to seek approval for more cannabis products, which could then be dispensed the same as other prescription drugs,” TD Cowen analyst Jaret Seiberg said in a note.

Trump’s administration has been looking to reclassify marijuana as a less dangerous drug, a shift that could ease criminal penalties and reshape the industry through potentially lower taxes and by making it easier to secure funding.

Funding remains one of the biggest challenges for cannabis producers, as federal restrictions keep most banks and institutional investors out of the sector, forcing pot producers to turn to costly loans or alternative lenders.

This sets the stage for several catalysts, including “additional states legalizing cannabis, safer banking being passed, and the ultimate uplisting of plant-touching cannabis stocks to major US exchanges”, Alliance Global Partners analyst Aaron Grey said.

Under the Controlled Substances Act, marijuana is listed as a Schedule I substance, implying it has a high potential for abuse and no currently accepted medical use.

Last year, the Biden administration asked the Department of Health and Human Services to review marijuana’s classification, and the agency recommended moving it to Schedule III classification.

The Drug Enforcement Administration has to review the recommendation and will decide on the reclassification.

(Reporting by Christy Santhosh, additional reporting by Sriparna Roy in Bengaluru; Editing by Leroy Leo)