Trump expected to sign executive order to reclassify marijuana as soon as Monday, source tells CNBC; pot stocks surge

Tilray Brands, 1-day

President Donald Trump is expected to issue an executive order as soon as Monday that would allow for reclassification of weed, a source familiar with the matter told CNBC. Such a move would allow cannabis companies to fall under different tax regulations and encourage investment.

Cannabis stocks took a leg up in Friday's midday trading following CNBC's report.

The Washington Post first reported on Thursday that Trump was expected to use an executive order to instruct federal agencies to reclassify marijuana as a less regulated Schedule III drug from a Schedule I. Axios reported the potential reclassification of pot — out of a group that includes heroin and into a lower tier of less dangerous drugs, such as steroids and Tylenol with codeine — would take place early next year.

Trump previously floated a change in marijuana's classification in August.

"Trump rescheduling marijuana was not an if, in our assessment, but a when," Ed Groshans of Compass Point, a middle-market investment bank, wrote to clients in a Friday note.

More optimism

Groshans said the reported change would be "positive" for the cannabis industry, allowing banks to serve the sector.

If Trump orders cannabis to be rescheduled, Groshans anticipates the Drug Enforcement Administration would finalize a proposed rule for the reclassification by the summer.

Bill Kirk, senior research analyst at Roth, said he's also monitoring whether the Supreme Court decides next week to hear a case on state regulations and federal prohibition of cannabis. A positive ruling for the industry in that case could speed up regulatory timelines.

The industry sees the latest moves as a sign of progress to normalize pot under national law.

"I'm a lot more optimistic than I ever have been," Tilray CEO Irwin Simon told CNBC.

Shawn Hauser, partner at cannabis-focused law firm Vicente LLP, said a reclassification would mark only a "partial victory," as the sector will need to continue fighting for legalization. However, she said the momentum can press Congress to create a regulatory framework that offers broader changes around safety, access and criminal justice reform than what a rescheduling provides.

"This the beginning of a new era of public health policy," Hauser said. "If implemented, it dismantles nearly a century of outdated drug policies that fly in the face of science and medicine."

Pot stocks have struggled since a brief mania around public growers and dispensaries in the years before Covid, even as cannabis has received broader acceptance and easier state classifications.

Tilray shares were recently trading at a little more than $10 after peaking at more than $2,140, adjusted for splits, in September 2018. The Amplify Cannabis ETF is still on track to lose more than 8% in 2025, its fifth straight down year.