Cannabis: Stocks Disappoint After Reclassification

U.S. cannabis stocks have fallen sharply after the government’s decision to reschedule the drug failed to meet investor expectations. The move, ordered by President Donald Trump, shifts cannabis from Schedule I to Schedule III but stops short of full federal legalisation. Share prices for major companies dropped as traders reacted to the limited scope of the changes.

The reclassification process began with a presidential directive to federal agencies, including the Drug Enforcement Administration (DEA), Food and Drug Administration (FDA), and Department of Health and Human Services (HHS). Their goal was to ease restrictions on cannabis research, aiming to improve public health understanding. However, the shift to Schedule III does not legalise recreational use, leaving state-level rules unchanged.

Investors had hoped for broader reforms, such as tax relief, banking access, and clearer FDA guidelines for medical cannabis. When these did not materialise, shares in companies like Canopy Growth, Tilray, and Aurora Cannabis tumbled. The market reaction reflected frustration over persistent hurdles, including limited banking services and ongoing regulatory uncertainty.

Industry responses have been divided. Some firms view the rescheduling as progress, while others remain cautious due to the lack of long-term clarity. Without further reforms, analysts warn that the sector could continue facing instability, as reported by Handelsblatt.

The rescheduling of cannabis has not delivered the market boost that investors anticipated. Companies must still navigate regulatory challenges, including banking restrictions and uneven state-federal rules. For now, the sector remains in a precarious position, with future stability hinging on additional government action.