U.S. cannabis stocks experienced a roller-coaster session on Thursday, December 18, following a landmark executive order from President Donald Trump that initiated the process of loosening federal restrictions on marijuana. The order directs the Attorney General to begin rescheduling cannabis from a Schedule I to a Schedule III controlled substance, marking the most significant shift in federal cannabis policy since 1970.
The move, aimed at facilitating medical research and easing the severe financial and tax burdens on the industry, initially sent shares of major cannabis companies soaring. Canopy Growth (CGC) surged nearly 12%, Aurora Cannabis (ACB) jumped almost 9%, and Tilray (TLRY) gained over 6% at their intraday peaks, as investor optimism flared.
The rally proved short-lived. In a stark reversal, many of these gains evaporated by the closing bell. Tilray ended the day down 4.2%, while Canopy Growth dramatically pared its advance to close 12% lower. Market analysts swiftly characterized the pullback as a textbook example of “buy the rumor, sell the fact” profit-taking.
Speculation about potential rescheduling had been building for weeks, leading to substantial pre-announcement rallies. Tilray’s stock, for instance, had already skyrocketed more than 50% in the prior two weeks. The formal signing of the order, while confirming the news, provided a clear catalyst for early investors to cash out. Some observers also noted that the market might have been hoping for a more sweeping policy shift, such as federal legalization of recreational use, leaving some investors disappointed by the scope of the change.
Beyond the day’s volatile trading, the policy shift carries profound symbolic and long-term implications. Rescheduling would move cannabis from Schedule I—a category defined as having no accepted medical use and a high potential for abuse, shared with drugs like heroin and LSD—to Schedule III. This category acknowledges accepted medical uses and a lower abuse potential, including substances like ketamine and certain anabolic steroids.
President Trump stated the action was responsive to patients in need and intended to boost scientific research. He clarified that marijuana remains illegal under federal law, subject to a complex patchwork of state regulations. Separately, the Centers for Medicare & Medicaid Services (CMS) plans to allow some beneficiaries access to hemp-derived CBD products as early as April 2026.
For the struggling cannabis industry, the most tangible benefit of rescheduling would be improved access to the traditional banking system and institutional capital. Currently, federal prohibition keeps most major banks and investors away, forcing companies into costly financing. Reclassification could significantly lower these barriers and attract stable, long-term investment.
However, the path forward remains uncertain. While the executive order instructs swift action, the final authority rests with the Drug Enforcement Administration (DEA), which must conduct its own review. The move also exposed political fissures: Senate Democratic Leader Chuck Schumer welcomed it, while dozens of Republican lawmakers criticized the decision in a letter, arguing it sends the wrong message.
The market’s swift transition from euphoria to caution reflects investors’ recalibration. They are now weighing whether Trump’s order is the key that unlocks a new era of growth for the cannabis sector or merely the first step in a long and arduous journey toward full regulatory normalization. The answer will be written in the details of the coming DEA decision and the subsequent flow of capital into the market.
