Trump's Marijuana Reclassification: Will Cannabis Giants Green Thumb, Tilray, and Trulieve Surge?

A Policy Turning Point for the Cannabis Industry

December 18, 2025 marks a watershed moment for American cannabis companies. President Trump signed an executive order reclassifying marijuana from Schedule I to Schedule III under the Controlled Substances Act—a move the American Trade Association for Cannabis and Hemp describes as “the most transformative federal policy shift in cannabis in over five decades.”

This isn’t merely symbolic. The reclassification acknowledges what 40 U.S. states, three territories, and Washington D.C. have already recognized: marijuana possesses legitimate medical applications. Yet Trump clarified a critical boundary—the executive order does not legalize recreational cannabis federally, nor does it sanction casual use.

What Schedule III Actually Changes

To understand the implications, consider the context. When President Nixon signed the Controlled Substances Act in 1970, marijuana landed in Schedule I—drugs deemed to have “no accepted medical use and high abuse potential.” That classification persisted for 55 years despite mounting medical evidence and state-level acceptance.

Schedule III classification represents a fundamental recalibration. It defines substances as having “moderate to low potential for psychological or physical dependence” and recognizes their therapeutic value. This semantic shift carries enormous practical consequences.

The Tax Code Game-Changer

For cannabis operators like Green Thumb Industries, Tilray Brands, and Trulieve Cannabis, the most consequential benefit involves IRS Code Section 280E. This provision has historically prevented cannabis businesses from deducting standard operational expenses—payroll, rent, marketing, utilities—that other industries write off automatically.

The reclassification creates a pathway to exemption from Section 280E. The financial impact compounds quickly. A cannabis retailer spending $10 million annually on payroll and facility costs suddenly gains access to legitimate deductions. That translates directly to higher after-tax profitability.

What happens next matters enormously. Three potential outcomes: companies could slash prices to capture market share, reinvest savings into marketing and expansion, or funnel capital toward shareholder returns.

Ripple Effects Across the Ecosystem

Beyond tax implications, reclassification addresses a persistent institutional barrier. Many banks have maintained distance from cannabis commerce due to the legal contradiction between state legalization and federal prohibition. Schedule III status reduces that friction, potentially opening doors to mainstream financial services—credit facilities, payment processing, investment capital.

All three companies have signaled optimism. Their CEOs publicly welcomed the policy shift. Tilray announced expansion plans for U.S. medical cannabis operations in immediate response to Trump’s announcement.

The Investment Reality Check

Yet enthusiasm shouldn’t blind investors to fundamental challenges.

Tilray Brands operates at a significant loss. The company posted a net loss of $793.5 million in Q3 2025 alone. Despite reclassification benefits, unprofitability remains a headwind.

Trulieve Cannabis, based in Florida, reported a Q3 net loss of $27 million. The path to sustainable profitability remains unclear.

Green Thumb Industries presents a different concern. The Illinois operator trades at a forward price-to-earnings multiple of 34.6—a premium valuation that prices in substantial future growth. Investors should weigh whether current share prices already reflect reclassification benefits.

Beyond Policy: Evaluating Each Company on Merits

Marijuana reclassification represents a structural tailwind, but not a singular investment thesis. Each company requires independent financial analysis, competitive positioning assessment, and management quality evaluation.

The cannabis industry’s legal environment has fundamentally shifted. That creates opportunity for well-positioned operators. Yet opportunity and guaranteed returns are distinct concepts. Reclassification opens doors; execution determines outcomes.

Investors considering Green Thumb, Tilray, or Trulieve should conduct thorough due diligence, examining balance sheets, cash burn rates, and market positioning alongside the policy catalyst.