Shares of cannabis companies surged after former U.S. President Donald Trump expressed support for cannabidiol (CBD) as a potential game-changer in senior healthcare. The endorsement, delivered in a post on Truth Social on Sunday, highlighted the potential of hemp-derived CBD to "revolutionize senior healthcare" by reducing disease progression and offering an alternative to prescription drugs.
Trump's remarks also follow earlier statements suggesting his administration might consider reclassifying marijuana, a move that could ease criminal penalties surrounding its use.
Market Reaction: Stocks Soar
The announcement triggered excitement across the cannabis sector, with several major stocks seeing significant gains. U.S.-listed shares of Canopy Growth soared by 18.3%, Tilray Brands skyrocketed 42%, Cronos Group rose 15.5%, and Aurora Cannabis saw a 25.4% increase. Exchange-traded funds (ETFs) also benefited, with AdvisorShares jumping 21.8% and Roundhill climbing 21.6%. Both ETFs appear on track for record quarterly gains exceeding 70%.
"MSOS, the largest U.S. marijuana-focused ETF, is... benefiting from President Trump's surprise Sunday support for the potential benefits of CBD, with any support going a long way for this beleaguered listed sector", said Ben Laidler, head of equity strategy at Bradesco BBI.
A Shift in Policy Direction?
Trump’s recent comments follow his administration's previous steps to ease regulations on hemp and CBD through the enactment of the Agriculture Improvement Act during his first term. However, marijuana remains classified as a Schedule I substance under the Controlled Substances Act, which categorizes it as having a high potential for abuse and no accepted medical use.
Reclassification efforts have been ongoing, with former President Joe Biden directing a review of marijuana’s status. That review resulted in the Department of Health and Human Services recommending a shift to Schedule III, a category for substances with moderate to low potential for dependence.
Trump’s hint at a possible reclassification of marijuana has been received positively within the industry. "This doesn't mean it's legalizing the drug, but it does reduce some of the burden on the companies", said Daniela Hathorn, senior market analyst at Capital.com. "I do think there is further room for these stocks to move higher if it's confirmed that the reclassification is happening."
Industry Response
The cannabis industry has welcomed Trump’s recognition of CBD’s potential health benefits for seniors. A spokesperson for Ontario-based Canopy Growth stated, "We're encouraged by the U.S. administration's recognition of cannabis and its potential role in supporting health and wellness for seniors."
Despite Monday's market rally, the broader cannabis sector remains volatile, reflecting the uncertain and prolonged regulatory landscape in the United States. While some companies, such as Canopy Growth, have lost nearly half of their value this year, others like Cronos and SNDL have seen significant gains, bolstered by Monday’s developments.
As discussions around reclassification and broader legalization continue, the cannabis sector remains highly sensitive to policy changes and public endorsements, with Trump’s latest remarks providing a much-needed boost to struggling stocks.