Canopy Growth to Recapitalize Debt

Trump's order to reschedule cannabis to schedule I doesn't legalize cannabis, nor resolve banking access for companies operating in the sector. Canadian cannabis stocks are down Friday, in part because it doesn't legalize marijuana, but also "related to expectation for banking to be in the executive order, based on some reports leading up," Benchmark Equity Research analyst Mike Hickey says. Shares of Canopy Growth, Tilray Brands and Aurora Cannabis, among others, are down, 10%, 7.6% and 8.6%, respectively. However, the analyst remains optimistic, saying that he still sees opportunity for cannabis companies to be granted banking access 2026. (adriano.marchese@wsj.com)

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 
-------                   ------      ----   ------   -------        ------ 
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 
 

By Nate Wolf

Cannabis stocks rose sharply Thursday on anticipation that President Donald Trump will sign an executive order to reschedule marijuana as a lower-class drug.

Trump's schedule showed he will sign an executive order at 1:30 p.m. Eastern Time. The order is about reclassifying marijuana, MarketWatch reported, citing a White House official.

Tilray Brands stock climbed 18% on Thursday, while U.S.-listed shares of Canopy Growth also gained 18%. The AdvisorShares Pure US Cannabis exchange-traded fund rose 3.2%.

Write to Nate Wolf at nate.wolf@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 
-------                   ------      ----   ------   -------        ------ 
Tilray Brands               TLRY     19.12     4.05     26.87     1,993,874 
TerrAscend                  TSND      1.54     0.31     25.20     1,596,718 
Curaleaf Holdings           CURA      6.23     1.18     23.37     3,060,932 
NXT Energy Solutions         SFD     0.355     0.06     18.33        10,000 
Eastern Platinum             ELR     0.405     0.06     15.71     1,505,458 
NFI Group                    NFI     14.46     1.58     12.27       616,659 
Canopy Growth               WEED      2.53     0.23     10.00    14,873,665 
Avalon Advanced Materials    AVL     0.055     0.01     10.00       515,229 
Almonty Industries           AII     10.99     0.92      9.14     1,116,056 
Beyond Oil                  BOIL      3.11     0.26      9.12        80,732 
 
                              LOSERS 
 
COMPANY                   SYMBOL      LAST   CHANGE   PERCENT        VOLUME 
-------                   ------      ----   ------   -------        ------ 
Conifex Timber               CFF      0.07    -0.02    -17.65       449,814 
Crown Capital Partners      CRWN       0.5    -0.09    -15.25         1,035 
Accord Financial             ACD      1.58    -0.19    -10.73        16,921 
Wallbridge Mining             WM     0.085    -0.01    -10.53       988,304 
Enthusiast Gaming Hldgs     EGLX     0.045    -0.01    -10.00        66,159 
Mountain Province Diamond   MPVD      0.05    -0.01     -9.09        30,000 
Saturn Oil & Gas            SOIL      2.33    -0.18     -7.17       344,392 
Sernova Biotherapeutics      SVA      0.13    -0.01     -7.14       160,867 
PMET Resources              PMET      4.52    -0.34     -7.00       132,367 
Birchtech                   BCHT      1.21    -0.09     -6.92        63,412 
 
 
Only includes stocks with at least 1,000 shares traded today. 
 
Data are delayed at least 15 minutes. 
 
Source: Dow Jones Market Data 
 

By Joe Light

After many false starts, investors are once again betting that marijuana businesses are close to seeing federal restrictions ease. This time, the odds may be better.

President Donald Trump on Monday acknowledged that the White House is considering reclassifying marijuana and other cannabis products as a Schedule III controlled substance, a move that would put them on par with many prescription drugs and could save U.S. cannabis companies millions of dollars per year in taxes. Marijuana is currently classified as a Schedule I drug, alongside substances such as heroin and ecstasy.

Shares of marijuana stocks jumped on Tuesday, with Tilray Brands up 22% to $4.04 and Canopy Growth up 14%, compared to the S&P 500's 0.5% drop. The AdvisorShares Pure U.S. Cannabis ETF is up 60% from last Friday, following reports that Trump is considering reclassifying marijuana by executive order.

Investors in marijuana stocks have seen this story before.

On Oct 6, 2022, the AdvisorShares Pure U.S. Cannabis ETF rose 34% as Biden instructed then Attorney General Merrick Garland to review marijuana's classification. On Sept. 9, 2024, the first trading day after Trump said he would support rescheduling marijuana in a Truth Social post, the ETF rose 11%. On Aug. 11, 2025, the ETF soared 26% after Trump told reporters he'd soon decide on the drug.

"Because a lot of people want to see it, the reclassification, because it leads to tremendous amounts of research. It can't be done unless you reclassify. So we are looking at that very strongly," Trump said in the Oval Office on Monday.

The White House didn't respond to a request for comment on Tuesday. A White House official on Friday said no final decision had been made.

There's reason to think Trump might move forward with his order. Politically, easing restrictions on marijuana use could resonate with younger voters, a group that helped propel Trump to victory in the 2024 election.

While Trump's comments might seem out of the blue, they're actually in part the culmination of a years-long process begun under the Biden administration to loosen restrictions. In May 2024, the U.S. Drug Enforcement Administration published a proposed rule to reclassify marijuana and solicited public comment.

The agency planned to hold hearings on the issue earlier this year, but they were delayed amid the transition to the new administration, with Republicans remaining divided on the issue. Trump's executive order would presumably resume the hearing process.

The benefits of Trump rescheduling the drug would be limited. Selling cannabis in most cases would still be illegal under federal law, as would interstate commerce. After a rescheduling, cannabis companies could deduct some business expenses from taxes, a change that could save the top 12 U.S. cannabis companies about $800 million a year, according to Viridian Capital Advisors. Rescheduling would also make it easier for academics to do research on the effects of cannabis.

Rescheduling the drug could pave the way for additional changes that would make it easier for cannabis companies to do business in the U.S.

Even though some states have legalized marijuana businesses, many banks still refuse to provide financial services to the industry while cannabis remains illegal under federal law. A bipartisan group of lawmakers has sponsored legislation that would give banks a safe harbor to lend to state-legal cannabis companies, and such a bill could gain momentum with the president's backing, Compass Point Research & Trading analyst Ed Groshans wrote in a research note.

"Rescheduling is not the whole enchilada but it would be a big deal," wrote analysts for Beacon Policy Advisors in a research note this week. "The momentum these changes would bring would itself be an 'important domino' in advancing other reforms."

Write to Joe Light at joe.light@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.