On Sunday, President Donald Trump released a video on Truth Social — produced by The Commonwealth Project — promoting hemp-derived cannabidiol (CBD) as a potential “gamechanger” for senior healthcare. (The Guardian) The video argues that CBD could help with pain management, stress, sleep, and reduce disease progression in older adults, and calls for Medicare or Medicaid coverage of cannabidiol. (The Guardian)
Beyond the health pitch, the video is widely interpreted as a signal that the Trump administration may push for reclassification of cannabis under federal law — moving it away from its current Schedule I status — which would carry major implications for the cannabis industry. (Financial Times)
Market Reaction: A Surge in Cannabis Stocks
Investors responded rapidly. Pre-market and early trading saw sharp gains in cannabis-related equities:
- Canopy Growth shares leapt ≈ 20 %. (Reuters)
- Tilray Brands spiked ~40–42 %. (Financial Times)
- Cronos Group and Aurora Cannabis rose in the 13 % range. (Reuters)
- The AdvisorShares Pure U.S. Cannabis ETF (MSOS) jumped ~20–25 % and is on track for its strongest quarterly gain ever (≈ 70 %) if momentum holds. (Reuters)
(For context, Canopy Growth is trading around $1.56 USD at closing markets.
Stock market information for Canopy Growth Corporation (CGC)
- Canopy Growth Corporation is a equity in the USA market.
- The price is 1.56 USD currently with a change of 0.22 USD (0.16%) from the previous close.
- The latest open price was 1.5 USD and the intraday volume is 114919716.
- The intraday high is 1.67 USD and the intraday low is 1.43 USD.
- The latest trade time is Monday, September 29, 12:46:41 PDT.
)
Analysts say that mere acknowledgment of federal support is powerful in an industry that has struggled for legitimacy and investor confidence. Trump’s remarks are being viewed as more than rhetoric — as a possible turning point in federal cannabis policy. (Financial Times)
One of the key structural constraints plaguing legal cannabis operators is Section 280E of the U.S. tax code, which prohibits standard business tax deductions for businesses trafficking controlled substances (including federally illegal cannabis). (Reuters) If cannabis were reclassified, these firms could reclaim large tax benefits, boosting profitability. (Financial Times)
Why the Industry Is Rallying — and Risks to Watch
Why the stock surge makes sense
- Regulatory hope: The possibility of a federal push to reclassify cannabis offers a pathway to easing current legal and financial burdens.
- Tax relief upside: Removal or reduction of 280E constraints could significantly improve margins for legal operators.
- Access to capital: Federally compliant status could allow more cannabis companies to list on U.S. exchanges and attract institutional investors. (Reuters)
- Narrative shift: The framing of cannabis (or CBD) as a legitimate medical therapy — particularly for seniors — helps counter decades of stigma and could influence policy momentum.
Major risks and caveats
- No confirmed policy change yet: Despite growing optimism, Trump’s statements are not yet backed by enacted legislation or regulatory action. (Investors)
- Political and legislative uncertainty: Congress, the DEA, and other agencies will all play a role. Pushback from federal law enforcement, conservative lawmakers, or narrower interpretations could derail meaningful reform.
- State–federal mismatch: Even with reclassification, states may still regulate cannabis differently; interstate movement and banking access remain complex issues.
- Company fundamentals: Many cannabis firms operate at a loss. Valuations are volatile and speculative; even with regulatory tailwinds, operational execution matters. (Investors)
- Regulatory nuance: CBD and hemp-derived products are easier to reclassify than fully psychoactive THC-rich marijuana; partial reforms might benefit only segments of the industry.
Outlook & Strategy: Is Now a Good Entry Point?
What the future could look like
If reforms proceed, here’s a plausible scenario:
- Cannabis reclassified to Schedule III (or equivalent), reducing legal risk.
- Elimination or reduction of 280E tax penalties, boosting profitability for compliant firms.
- Greater institutional participation, improved liquidity, more IPOs and M&A in the space.
- Expansion of medicinal cannabis use in Medicare/Medicaid settings, especially in aging population markets.
- A shakeout: weaker operators fail, stronger ones scale and consolidate.
However, this is a multi-phase process. The transition (if it happens) could span months to years, with false starts and regulatory pushback.
Is this the time to get in?
It depends on your risk tolerance, timeline, and allocation discipline. Here are pros and cons to consider:
Pros of entering now
- You capture more upside if reforms are confirmed.
- Stocks are already rallying, so momentum can amplify gains.
- Lower valuations currently mean higher potential upside relative to later stages.
Cons / Cautions
- You risk being early: if policy delays or fails, shares could pull back hard.
- Volatility will be extreme — big swings both ways.
- Not all companies will benefit equally — fundamentals and regulatory compliance matter.
- Overexposure to such a regulatory bet can skew portfolio balance.
For many investors, a measured approach might be best: allocate a modest “play” position to high-quality names with strong fundamentals or best positioning, rather than going “all-in.”
