Cannabis stocks are soaring on media reports that U.S. President Donald Trump will ease federal restrictions on the recreational drug.
The stock of cannabis producer Tilray Brands (TLRY) is up about 30% on the news, while shares of Canopy Growth (CGC) are up 23%.
Trump is expected to tell U.S. government agencies to reclassify cannabis as a Schedule III drug, according to a report first published in The Washington Post newspaper.
Such a move would allow cannabis companies to fall under different tax regulations and encourage investment, while placing the drug in a category that includes Tylenol with codeine.
Currently, cannabis in the U.S. is classified in a group of drugs that includes heroin and cocaine. Now, Trump plans to move cannabis into a lower tier with less dangerous drugs.
Trump has talked for several months about reclassifying cannabis.
Cannabis stocks have struggled since most went public in Canada around seven years ago after the federal government in Ottawa legalized the drug.
A small Canadian market and competition from the black market have conspired to hurt cannabis players such as Tilray and Canopy Growth.
Tilray’s stock has declined 42% this year and fallen 89% in the last five years. The company’s shares currently trade at $8.43 U.S.
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