Cannabis stocks surged Friday morning after several reports said the Trump administration is nearing an executive order to reclassify marijuana. The Washington Post first reported that President Trump is expected to direct federal agencies to pursue reclassification, and multiple outlets later confirmed the story.
Shares across the sector ripped higher on the news. The AdvisorShares Pure US Cannabis ETF MSOS jumped nearly 40 percent in premarket trading. Canadian names also took off, with Tilray $TLRY ( ▼ 8.75% ) , Canopy Growth $CGC ( ▼ 11.54% ) , and SNDL $SNDL ( ▼ 5.64% ) all gaining more than 20 percent.
Reclassification rumors have circulated repeatedly under the Trump administration, but none have yet materialized. The Biden administration also attempted to move the process forward in 2024, though it stalled within the Department of Justice.
Reclassifying marijuana wouldn’t legalize it nationwide, but it would ease some of the biggest financial burdens on U.S. cannabis companies. Operators face limited access to banking, restrictive tax rules, and heavy debt loads without bankruptcy protections, all of which have kept margins tight even as the industry grows.
Politically, cannabis reform has long faced resistance from Republicans, who inserted a ban on hemp derived THC products into last month’s federal funding bill. Still, Trump has advisers in his circle who support the industry.
According to the Post, Trump met Wednesday with cannabis executives, HHS Secretary Robert F. Kennedy, and CMS chief Mehmet Oz. During the meeting, Trump phoned House Speaker Mike Johnson, who was skeptical of the move. Executives pushed back, and the Post reports that Trump appeared persuaded.