Canadian Cannabis Stocks Down Without Legalization, Banking Access — Market Talk

By Anita Hamilton

Traders pushing down the price of pot stocks may be underestimating the positive impact of President Donald Trump's executive order paving the way for lower restrictions on cannabis products.

Most significantly, reclassification will enable marijuana businesses to deduct ordinary business expenses covered by section 280E of the federal tax code — including payroll, rent, utilities, and insurance costs — on their tax returns. That won't happen immediately, as the change likely won't take effect until early next year.

"Removing 280E represents a transformational margin catalyst that could significantly improve profitability, accelerate industry consolidation, and reshape long-term growth trajectories across the U.S. cannabis sector," Benchmark analyst Mike Hickey wrote in a Friday note.

Others are equally upbeat. "We view the EO as clearly bullish for the legal cannabis industry," analysts at Seaport Research Partners wrote Thursday. Easing restrictions on cannabis products would improve after-tax cash flow while "meaningfully" de-risking the industry's outlook.

The tax deduction change alone could collectively save pot businesses some $150 million in the so-called 280E taxes, according to an estimate from Alliance Global Partners. "While most operators have stopped paying their 280E tax and are realizing the cash flow benefits, but accumulating an uncertain tax liability, rescheduling will stop the uncertain tax liability building," the analysts wrote.

It could also lower pot companies' debt costs since the change enables them to take interest tax deductions previously unavailable to them, Alliance notes.

Notably the executive order does nothing to legalize pot federally or expand access to banking. That's what's driving declines in pot stocks like cannabis producers Tilray Brands and Canopy Growth, both of which were down sharply by midday Friday, following similar drops on Thursday. On the bright side, the exchange-traded fund, AdvisorShares Pure US Cannabis, was rebounding.

Write to Anita Hamilton at anita.hamilton@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.

 
                              GAINERS 
 
COMPANY                   SYMBOL      LAST   CHANGE   PERCENT        VOLUME 
-------                   ------      ----   ------   -------        ------ 
Colabor Group                GCL      0.04     0.02     60.00     1,740,277 
Bengal Energy                BNG     0.015     0.01     50.00         2,887 
Talon Metals                 TLO      0.55     0.14     32.53    18,538,726 
Charlotte's Web Holdings    CWEB      0.36     0.08     28.57       574,721 
WildBrain                   WILD      1.93     0.43     28.33     2,186,731 
Aberdeen International       AAB      0.03     0.01     20.00         1,100 
Highlander Silver           HSLV      4.53     0.73     19.21       684,284 
Paladin Energy               PDN      8.86     1.18     15.36       327,867 
Global Atomic                GLO      0.72     0.08     12.50     1,951,132 
TerrAscend                  TSND      1.27     0.14     12.39       611,258 
 
                              LOSERS 
 
COMPANY                   SYMBOL      LAST   CHANGE   PERCENT        VOLUME 
-------                   ------      ----   ------   -------        ------ 
Appili Therapeutics         APLI      0.02    -0.01    -20.00        42,002 
Resverlogix                  RVX      0.09    -0.02    -14.29       185,634 
Intermap Technologies        IMP      2.02    -0.33    -14.04       542,480 
Glacier Media                GVC     0.195    -0.03    -13.33       141,000 
BlackBerry                    BB      5.38    -0.65    -10.78     5,306,797 
Avant Brands                AVNT      0.91    -0.10     -9.90        14,032 
Avalon Advanced Materials    AVL      0.05    -0.01     -9.09       109,060 
Conifex Timber               CFF      0.06    -0.01     -7.69       518,321 
Tilray Brands               TLRY     15.72    -1.24     -7.31       713,682 
Avicanna                    AVCN     0.215    -0.02     -6.52        47,931 
 
 
Only includes stocks with at least 1,000 shares traded today. 
 
Data are delayed at least 15 minutes. 
 
Source: Dow Jones Market Data 
 

Ratings actions from Baystreet: http://www.baystreet.ca

U.S. cannabis stocks rise in premarket trading after President Trump signed an executive order asking the U.S. government to reclassify the substance as less dangerous. Shares in cannabis producers surged in recent months in anticipation of a policy change that would ease tax burdens on the companies. Investors took profits on the executive order, but some gains recovered premarket. A basket of cannabis stocks--represented by the AdvisorShares Pure US Cannabis exchange-traded fund--rises 5.7% premarket after closing down 29% Thursday. The ETF has climbed more than 50% in the last month as Trump signaled a reclassification of the drug. Nasdaq-listed Aurora Cannabis nudges up 1.5% premarket, while Tilray Brands is up 1.9%. (josephmichael.stonor@wsj.com)

 
                              GAINERS 
 
COMPANY                   SYMBOL      LAST   CHANGE   PERCENT        VOLUME 
-------                   ------      ----   ------   -------        ------ 
Charlotte's Web Holdings    CWEB      0.28     0.06     27.27     1,713,530 
Karnalyte Resources          KRN      0.27     0.05     20.00         9,084 
Star Diamond                DIAM     0.035     0.01     16.67        28,620 
Titan Mining                  TI      3.40     0.38     12.58       110,686 
Glacier Media                GVC     0.225     0.03     12.50         1,000 
Global Atomic                GLO      0.64     0.06     10.34     1,549,598 
TeraGo                       TGO      0.68     0.06      9.68        33,020 
Mega Uranium                 MGA     0.415     0.04      9.21       434,575 
WildBrain                   WILD      1.50     0.12      8.70       168,734 
Optiva                       OPT      0.25     0.02      8.70         6,514 
 
                              LOSERS 
 
COMPANY                   SYMBOL      LAST   CHANGE   PERCENT        VOLUME 
-------                   ------      ----   ------   -------        ------ 
TerrAscend                  TSND      1.13    -0.69    -37.91     3,034,183 
Bengal Energy                BNG      0.01    -0.01    -33.33        90,000 
Curaleaf Holdings           CURA      4.41    -2.08    -32.05     7,458,635 
Prairie Provident Rscs       PPR      0.02    -0.01    -20.00       153,286 
Nouveau Monde Graphite       NOU      3.50    -0.75    -17.65       734,070 
Colabor Group                GCL     0.025    -0.01    -16.67     1,603,870 
Microbix Biosystems          MBX      0.21    -0.03    -12.50       386,707 
Canopy Growth               WEED      2.32    -0.33    -12.45    35,927,552 
Aegis Brands                 AEG      0.28    -0.03     -9.68        16,100 
FLINT                       FLNT      1.22    -0.13     -9.63        23,808 
 
 
Only includes stocks with at least 1,000 shares traded today. 
 
Data are delayed at least 15 minutes. 
 
Source: Dow Jones Market Data 
 

1443 ET - Cannabis companies are in high spirits following President Trump's executive order to reclassify marijuana as a Schedule III drug. Kim Rivers, chief executive officer of Trulieve Cannabis, says in a statement that the decision "represents long overdue change and a major milestone in cannabis reform," adding that the company is committed to supporting Trump's administration through the regulatory shift. Tilray announced that it was scaling up its U.S. medical marijuana business and says "this landmark decision is a significant catalyst for positive change within the health, wellness, and business communities across the U.S." Cresco Labs CEO Charlie Bachtell called the decision "the most consequential moment in the history of U.S. cannabis." The executive order doesn't legalize marijuana federally, but would ease tax burdens for cannabis businesses and facilitate more research. (elias.schisgall@wsj.com)

1240 ET - Micron Technology's results are a good sign for fellow memory provider Sandisk, Benchmark analysts say. Micron's results were ahead of Wall Street estimates and its guidance far outpaced analysts' projections, the analysts note. Demand is expected to significantly exceed supply beyond calendar year 2026, they say. The analysts raise estimates for Sandisk's calendar year 2026 earnings. Sandisk shares are up 4.7% to $216.58, while Micron's stock rises 11% to $251.16. (katherine.hamilton@wsj.com)

1221 ET - Micron Technology can't keep up with the soaring demand from AI developers for its memory products, Wedbush analysts say. The company can only fulfill about half to two-thirds of orders with key customers, the analysts say. Micron's ability to increase supply is constrained by a lack of available clean room capacity, which is where memory is manufactured, they say. The lack of available space also appears to be limiting capital expenditures, the analysts say, as Micron's outlook of $20 billion in spending was less than anticipated. (katherine.hamilton@wsj.com)

1217 ET - Micron Technology is expecting memory supply will remain tight well into calendar year 2027, giving AI customers little relief, JPMorgan analysts say. The entirety of Micron's high-bandwidth memory production in 2026 is already locked in on pricing and volume agreements, the analysts say. Any incremental bit capacity additions will likely be snapped up by customers, they say. Supply constraints will be exacerbated by Micron's transition to high-bandwidth memory 4, which will consume 33% more wafers than the current version of the product, the analysts say. GPUs, XPUs and AI servers are also rapidly increasing their requirements for memory content in the meantime, they say. Micron climbs 12%. (katherine.hamilton@wsj.com)

1207 ET - Prudent Canadian consumers are opting more for experiences than discretionary goods. "The Canadian story is about elevated economic anxiety," says Deloitte's national retail sector leader, Shaunna Conway, but paired with value-driven re-engagement in spending. She says that overall spending intentions have recovered to levels last seen in mid-2023, driven largely by dining, travel and social activities. Holiday entertaining spending is forecasted to rise 13% while non-gift purchases down by 8%. While financial pressures persist, Canadian consumers are spending more selectively, she says. (adriano.marchese@wsj.com)

1044 ET - Renovated homes are still attracting more online interest and selling faster than other older homes, Realtor.com says, but the long-standing fix-and-flip advantage has weakened significantly as higher mortgage rates reshape buyer demand and pricing power. This analysis follows an earlier in-depth analysis of fixer-uppers on the market, which found fixer-uppers are priced 54.2% lower than the median single-family home in the U.S. Renovated homes still catch buyers' eyes, but financing the cost of those improvements at today's rates is less appealing to today's price-sensitive shoppers. That's causing the performance gap between flipped homes and other older homes to shrink compared with 2021. Flipped homes tend to be smaller than older homes, carry a higher price per square foot, and are more likely to be located in urban areas. (chris.wack@wsj.com)

1039 ET - Seasonal cooling is finally seeping into the housing market after an unseasonably active fall, according to Zillow. Price cuts from sellers dropped back to normal levels from near-record highs; a rare instance of buyers losing a bit of leverage in a year when many housing trends moved in their favor. Affordability is still a hurdle for home buyers, Zllow says, but 2025 brought real progress. Mortgage payments dropped by more than $100 a month, while incomes continued to rise. For many households, that small shift can be the difference between sitting out the market and finally being able to buy or sell a home. Low mortgage rates in September and October pushed buyers and sellers to be more active than usual. But November saw a return to seasonality, despite mortgage rates that ticked down to 2025 lows. Homeowners without a need to sell are likely deciding to wait out the winter. (chris.wack@wsj.com)

1000 ET - U.S. pending home sales fell 5.8% from a year earlier during the four weeks ending December 14, Redfin says, the biggest decline since the start of 2025. On a metro level, pending sales declined in all but six of the 50 most populous U.S. metro areas, with the biggest drops in San Jose with 35.1% year-over-year, Houston with 20.9%, and Oakland with 17.6%. The typical U.S. home that does sell is taking 52 days to go under contract, about a week longer than last year. Redfin says house hunters are hesitant this holiday season because mortgage rates are stubbornly sitting above 6%, and home-sale prices are rising, putting homes out of reach for many would-be buyers. Slow homebuying demand is pushing would-be sellers to the sidelines, too. New listings are down 3.1% year-over-year, the biggest decline in more than two years. (chris.wack@wsj.com)

0914 ET - TD Bank says its tracking of bank-card spending shows a pickup in consumer outlays compared with 2024, powered by expenditures on entertainment and recreation. With 11 months of anonymized bank-card data, TD says spending through November rose 5.4% versus 4.9% in the comparable year-ago period. TD economist Maria Solovieva attributes the pickup in spending to lower interest rates, as Bank of Canada cut its policy rate four times this year to 2.25%. "Growth would likely have been stronger had consumer confidence not taken a hit from tariff tensions," Solovieva says. This represents another sign of resilience in the Canadian economy amid heightened trade-policy uncertainty. (Paul.Vieira@wsj.com, @paulvieira)

0903 ET - General Motors was quick to act in redirecting its electric vehicle strategy and is now seeing the benefits, say Wedbush analysts, who raise their price target to $95 from $75. As Ford takes a massive charge to pull away from EVs, GM has been ahead of the game in refocusing on internal combustion engines and significantly reducing its EV footprint. "GM has been multiple steps ahead of the curve with its EV adjustments," the analysts say. "With GM looking to re-calibrate around high-demand, high-margin businesses, we believe the company is taking the right approach to navigate the EV storm." (nicholas.miller@wsj.com)

0850 ET - TAE Technologies' merger with Trump Media sets it up to lead the U.S.'s nuclear fusion efforts, which will be key in the AI race versus China, say Wedbush analysts. TAE has already achieved fusion breakthroughs that put it "at the top of the mountain in the fusion global scene," the analysts say. China has the advantage over the U.S. in energy generation and is moving quickly on nuclear energy. Now TAE, armed with significant capital and President Trump's political support, will "be front and center as the centerpiece of the US nuclear fusion ambitions over the next decade," the analysts say. Trump Media & Technology surges 26% premarket. (nicholas.miller@wsj.com)

0846 ET - U.S. stock futures remain higher following a better-than-expected inflation reading in November and weekly jobless claims that were slightly lower than expected. Consumer prices rose 2.7% in November from a year earlier, according to a delayed government report, slowing from 3% in September. Weekly jobless claims come in at 224,000 versus the 225,000 expectation of economists polled by WSJ. S&P futures are up 30 points. (patrick.sheridan@wsj.com)