Does Marijuana Rescheduling Really Help Tilray’s Stock?
One of the things that can really move shares of Tilray Brands (TLRY -2.40%) is any renewed hope that marijuana reform is on the horizon in the U.S. When there is hope that legalization may finally be progressing, that’s when the stock can surge in a hurry. I don’t think even a strong earnings report would do more.
Investors often buy Tilray’s stock due to the expectation of marijuana legalization taking place in the U.S. in the near future. That hasn’t panned out, and unsurprisingly, the stock has tanked. In just the past 12 months, the stock has lost 76% of its value.
Recently, it’s been the rescheduling of marijuana in the U.S. that has gotten investors at least temporarily bullish on Tilray’s stock. Would rescheduling truly be a positive catalyst for this troubled pot stock?
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Rescheduling primarily helps U.S. cannabis operators
The big news in the marijuana industry in the U.S. this year has undoubtedly been the move from the federal government to reclassify medical marijuana products from Schedule I to Schedule III. While marijuana remains a controlled substance, rescheduling makes it easier to study the substance, potentially paving the way for greater reform in the future — but it does not guarantee that legalization is forthcoming.
The main beneficiaries of rescheduling are medical marijuana companies already operating in the U.S., as their tax bills will be much lower because Section 280E of the tax code will no longer apply. The section prevents companies from deducting ordinary expenses from their taxes and thus can be incredibly burdensome for businesses.
TLRY – Tilray Brands
$2.85-$0.07 (-2.40%)
NASDAQ · As of 4:00 PM ET 11/09/26
Investors should be careful not to overreact to any rescheduling news
The long-term hope is that rescheduling marijuana to a less harmful category will inevitably lead to legalization. But that’s not a guarantee to happen by any means. Even if that does happen, it’s a process that could take years. That’s why investors who consider buying Tilray’s stock today should brace for the reality that legalization is not inevitable in the U.S., regardless of what happens with rescheduling or other reform, and that even under a best-case scenario, it may take years.
I’ve seen it happen again and again with Tilray’s stock over the years: positive cannabis-related news sends the stock soaring temporarily, only for it to inevitably give back those gains and fall to new lows.
While marijuana reform may be positive news for the overall industry, that doesn’t mean every cannabis company will benefit from it the same way.
Source: www.fool.com — article syndicated from the publisher’s feed; all rights remain with the original publisher.