Cannabis stocks surge on Trump’s rumored Schedule 3 marijuana change. How high can pot shares get?

Multiple news reports this week said that President Trump is expected to reclassify marijuana’s drug scheduling, which would lessen restrictions on its use and potentially allow companies that operate in the cannabis space to increase business.

After the news broke, the stock prices of several cannabis industry companies skyrocketed. Here’s what you need to know.

What’s happened?

On Thursday, multiple outlets reported that the Trump administration is considering reclassifying marijuana from its current level as a Schedule I drug to a Schedule III drug.

The Washington Post was the first to report on the potential reclassification, citing six sources familiar with the matter.

As with most things Trump does, he is expected to issue a reclassification directive via an executive order.

While the Post notes that the rescheduling would not legalize marijuana on a federal level, it would loosen restrictions on its use and potentially be a boon to companies operating in the burgeoning cannabis space.

A White House official told Fast Company Friday that no final decision has been made on the reclassification.

Marijuana could go from Schedule I to a Schedule III drug

If the reclassification goes ahead, marijuana would be reduced from a Schedule I classification level to a Schedule III.

A Schedule I drug is any drug “with no currently accepted medical use and a high potential for abuse,” according to the United States Drug Enforcement Administration (DEA).

Drugs in this category include ecstasy, heroin, LSD, peyote, and, currently, marijuana, among others.

A Schedule III drug is a drug “with a moderate to low potential for physical and psychological dependence,” the agency notes.

Current Schedule III drugs include anabolic steroids, ketamine, testosterone, and Tylenol with codeine.

If the rescheduling of marijuana does go ahead, it will then be lumped in with products such as Tylenol with codeine as far as classification goes.

That would make marijuana less regulated than Schedule II drugs like Adderall, cocaine, Demerol, fentanyl, OxyContin, Ritalin, and Vicodin.

Cannabis stocks get high after reclassification reports

As CNBC notes, the reclassification of marijuana from a Schedule I to a Schedule III drug would have economic advantages for cannabis companies, mainly in the form of different tax regulations.

It could also help spur investment in those companies as stigma further reduces around the use of cannabis products.

Today, in early-morning trading, investors in those companies are cheering the news. Numerous cannabis industry firms are seeing their stock prices soar as of the time of this writing, including:

• Aurora Cannabis Inc. (Nasdaq: ACB): up 12%
• Canopy Growth Corporation (Nasdaq: CGC): up 30%
• cbdMD, Inc. (NYSE: YCBD): up 77%
• Tilray Brands, Inc. (Nasdaq: TLRY): up 28%

However, it’s worth mentioning that while cannabis stocks are flying high today, there is no guarantee from the administration yet that marijuana will be reclassified.

Leaving marijuana classified as a Schedule I drug could weigh heavily on cannabis companies’ stock prices in the months ahead.

And even with today’s price jumps, cannabis companies have had a pretty horrible run over the past five years as far as their share prices are concerned.

Aurora Cannabis shares are currently down 94% over the past 60 months. Canopy Growth Corporation’s shares are down 99% during that same time. Meanwhile, Tilray Brands is down 85% and CbdMD is down 99% during the same period.