Shares of Tilray Brands, Inc. experienced one of their most powerful trading sessions in recent memory, soaring approximately 44% in a single day. This dramatic move was fueled by widespread media reports suggesting a pivotal shift in U.S. drug policy could be imminent, specifically the potential reclassification of cannabis at the federal level.
The Catalyst: A Potential Federal Policy Overhaul
According to major U.S. news outlets including the Washington Post and CNBC, the Biden administration is reportedly preparing an executive order. This directive would instruct federal agencies to move cannabis from Schedule I of the Controlled Substances Act—a category that includes substances like heroin—to Schedule III, which covers drugs with a moderate to low potential for dependence, such as certain steroids.
The market’s reaction to this news was immediate and forceful. Tilray stock opened at $8.43, surged to an intraday high of $12.41, and ultimately settled to close at $12.15. This 44.13% gain was accompanied by extraordinary trading volume, with more than 84 million shares changing hands. This figure represents over ten times the stock’s average 30-day volume of roughly 5 to 7 million shares.
Activity in the options market also intensified dramatically, with over 213,000 contracts traded. The overwhelming majority were call options, indicating a strong market sentiment betting on further short-term price appreciation.
Operational Developments and Shifting Analyst Sentiment
Alongside the regulatory speculation, Tilray announced a product development. The company launched new “Amped Live Resin Liquid Diamond” vape cartridges under its Redecan brand on Thursday. These products will debut in the Canadian provinces of Ontario and Alberta, with a nationwide rollout across Canada scheduled for early 2026.
On the research front, ATB Capital Markets revised its rating on Tilray, upgrading the stock from “Strong Sell” to “Hold” on Friday. While this adjustment may have provided support, the sheer magnitude of the share price advance underscores that the dominant market driver was the prospect of U.S. cannabis rescheduling.
The Core Financial Impact: Relief from Tax Burden
The intense market response is rooted in U.S. tax code Section 280E. Currently, because cannabis is classified as a Schedule I substance, businesses operating in this space cannot deduct standard operating expenses, resulting in a cripplingly high effective tax rate.
Should investors sell immediately? Or is it worth buying Tilray?
A shift to Schedule III would essentially nullify this provision. Industry estimates suggest the after-tax profits of U.S. operators could increase by 40% to 70% as a result. Although Tilray is headquartered in Canada, it has strategically positioned itself for U.S. market entry through existing alcohol-sector investments and options on American cannabis operators. Company management has previously indicated that federal legalization could unlock an incremental market opportunity valued between $300 million and $500 million.
A Sector-Wide Rally and Contextual Caution
The buying frenzy was not isolated to Tilray. The entire cannabis sector witnessed a powerful re-rating:
* Canopy Growth (CGC) shares surged 52%.
* The Amplify Seymour Cannabis ETF (CNBS) jumped 54%, marking its strongest trading day on record.
This indicates a broad reassessment of regulatory risk for the industry, rather than a company-specific story. However, a note of caution emerged from the White House, where an official stated on Friday that “no final decisions have been made,” reminding investors that significant political uncertainty remains.
It is also noteworthy that Tilray executed a 1-for-10 reverse stock split on December 1, 2025. Following that announcement, the stock had initially declined by about 20%. The recent rally has not only erased those losses but has pushed the share price significantly higher.
Market Outlook: Volatility Around the Decision
Attention now turns to the coming week, where the potential signing—or further delay—of an executive order is likely to trigger substantial volatility in either direction.
- Key Event Risk: Should the order be signed as early as Monday, a continuation of the rally is plausible. This is especially true given a short interest position of approximately 9.6% of the free float, where covering by short sellers could generate additional buying pressure. Conversely, a delay or rejection of the policy would likely trigger a sharp pullback.
- Technical Perspective: The leap to $12.15 has allowed the stock to clear near-term resistance levels and move well above its post-split lows. However, within its 52-week range of $3.51 to $23.20 (split-adjusted), the equity remains highly volatile.
- Analyst Consensus: Despite the powerful surge, the prevailing analyst rating for Tilray remains at “Hold,” with a variety of price targets. The market is currently pricing in a plausible, but not yet certain, regulatory outcome.
The primary driver for the stock in the near term will be the specific signals from Washington and whether they confirm or temper the market’s newly priced expectations for cannabis rescheduling.
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