Cannabis Stocks Drop. Will Trump Reclassify Marijuana Today?

A person smoking marijuana during a 420 celebration at Washington Square Park in New York City. (LEONARDO MUNOZ/AFP via Getty Images)

Key Points

• Cannabis stocks, including Tilray Brands and Canopy Growth, fell on Monday amid uncertainty regarding federal marijuana restrictions.
• Investors awaited a potential executive order from President Trump to reclassify marijuana as a Schedule III substance.
• Reclassification would change tax requirements for cannabis companies but would not federally legalize recreational use.

Cannabis stocks dropped on Monday, as investors waited to see if President Donald Trump would loosen federal restrictions on marijuana.

Tilray Brands fell 10% and Canopy Growth slid 4.6%. The S&P 500 was down 0.2%.

The weed stocks surged on Friday after multiple outlets reported that Trump could sign an executive order to reclassify marijuana as a Schedule III substance as early as Monday. But a White House official told Barron’s on Friday that no final decision had been made.

The White House didn’t respond to a comment from Barron’s on Monday.

Reclassifying cannabis from Schedule I to Schedule III would move the substance into the same category as certain prescription medications, rather than alongside heroin and other drugs deemed to have no accepted medical use.

The change wouldn’t legalize marijuana for recreational use at the federal level, but it would alter tax treatment for cannabis companies such as Tilray and Canopy.

Write to George Glover at george.glover@dowjones.com