By Mackenzie Tatananni

When speculation broke out that President Donald Trump could move to reschedule marijuana as a Schedule III drug before the end of 2025, cannabis stocks soared. Those gains were short-lived.

However, Tilray Brands sees meaningful improvement on the horizon. The company said late Thursday that a potential rescheduling of marijuana in the U.S. would be a boon to its medical cannabis business.

CEO Irwin Simon described the Trump administration's push to reschedule the drug as "one of the most consequential regulatory shifts the industry has seen in decades."

Marijuana is currently classified as a Schedule I substance, indicating no accepted medical use and a high potential for abuse. Rescheduling it would move it from a class of drugs like heroin to a group including combination pain medications.

Expectations for progress on the regulatory front sent Tilray stock from under $10 to a recent closing high of $13.94 on Dec. 16. But the stock has slipped back. Although Trump ultimately signed an executive order directing the attorney general to reclassify marijuana as a Schedule III drug, any changes won't be immediate.

Efforts to reschedule marijuana were underway long before Trump took office. The Justice Department proposed making marijuana a Schedule III substance in 2024. The Drug Enforcement Administration was working its way through the review process when Trump was sworn in last January.

A change at the federal level won't allow for legalized recreational sales, but it will benefit companies in terms of their taxes. Companies dealing in Schedule I drugs are barred from deducting business expenses such as payroll and marketing costs when calculating federal taxable income.

In the meantime, Tilray's latest earnings, which pointed to growth in its cannabis business, may help the stock.

After the closing bell Thursday, Tilray posted what it described as record financial results for its fiscal second quarter. Net revenue rose ticked 3% higher to $217.5 million, topping the $210.9 million consensus among analysts polled by FactSet.

Several business lines struggled. Revenue for Tilray's beverage business declined to $50.1 million from $63.1 million in the prior year, while wellness revenue remained flat.

However, revenue for its cannabis business rose 3% to $67.5 million. The gains were driven by a 36% spike in international cannabis revenue and 6% growth in adult-use cannabis among Canadian customers.

The company narrowed its loss to 41 cents a share from 99 cents a share in the same period last year. Analysts had expected a loss of 21 cents a share.

Shares began rising in after-hours trading and modestly extended their gains on Friday, rising 1.6% to $9.28. That compares with a closing price of $21 on Oct. 9, the stock's highest close in 2025.

Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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January 09, 2026 12:04 ET (17:04 GMT)

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