President Trump’s Major Marijuana Move: What It Means for Canopy Growth, Green Thumb, and Tilray
At the end of last year, the cannabis industry was rocked by a significant change in the laws covering the drug.
This, however, wasn’t as momentous as it first seemed. Let’s shine a grow light on how it will affect — or not — three prominent marijuana companies, Canada-based Canopy Growth (CGC 2.71%) and Tilray Brands (TLRY 0.69%), and the U.S. multi-state operator (MSO) Green Thumb Industries (GTBIF 0.83%).
Image source: Getty Images.
Medical moved
For those unfamiliar, the federal government sorts controlled substances into five so-called schedules. Schedule I is for substances considered the most dangerous and with the least medicinal value. Harmfulness declines, and utility rises as we descend through Schedules II to V.
Last December, President Donald Trump issued an executive order directing the Drug Enforcement Administration (DEA) to reschedule pot from Schedule I to Schedule III. This past April, the move was enacted by acting Attorney General Todd Blanche. That was a great triumph for the marijuana business, and a boon to every weed consumer in this country.
Actually, aside from medical marijuana patients who no longer have to worry about being busted with the product they need, it wasn’t.
That’s because only medical marijuana was rescheduled; the far larger recreational category remains mired in Schedule I. Oh well. At least the companies that produce/sell medical products will benefit from this change.
Except, not entirely. The most significant change for medical pot businesses is that being moved from Schedule I to Schedule III means these products are no longer subject to the Internal Revenue Service’s (IRS) Section 280E.
This is a federal statute under which Schedule I drug purveyors are not allowed to deduct ordinary business expenses — rent, utilities, etc. — from income in their financial results. Now freed from this burden, medical pot companies can treat that business like any other and enjoy the same tax advantages.
But even that’s not a clear win.
Medicinal weed being in Schedule III confers a new set of obligations on a seller in terms of regulatory compliance and reporting, and record-keeping. It’s also a headache for the numerous companies that sell both recreational and medical products, as they now have to painstakingly track sales of each separately.
Incremental at best
As for the trio of mentioned companies, the Canadians, Canopy Growth and Tilray, are active in the medical segment. Of the pair, Canopy Growth is currently the frontrunner, with medical sales of more than 25 million Canadian dollars ($17.7 million) in its home country. This comprised nearly half of its total marijuana revenue in its most recently reported quarter.
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Tilray, meanwhile, is proportionally less dependent on medical pot. That said, its international sales in the category have been soaring lately, rising by 73% year over year in its fiscal third quarter of 2026 to more than $24 million.
But this is almost entirely beside the point, as neither company can directly export medical marijuana to the U.S. As such, they’re not subject to our currently byzantine restrictions and laws on these products.
Canopy Growth has an affiliate — not, importantly, a subsidiary or even a stake in a joint-venture — Canopy USA, which sell medical pot. As such, it will be affected by rescheduling. We won’t get into the weeds (sorry) here, but due to push-back from Nasdaq, Canopy Growth has elected not to consolidate Canopy USA’s financials into its own. So there’s no effect on Canopy Growth.
Tilray is very active in the U.S. market, but not as a seller of any variety of weed. It’s invested heavily in craft beer companies, and does decent business selling such drinks south of the Canadian border.
Finally, since Green Thumb doesn’t break down its cannabis revenue into recreational and medical — although it has retail licenses in states that have legalized sales of both — we can’t get much of a grip on the impact medical rescheduling will have on its fundamentals. The company hasn’t provided any insight on the matter, either.
Rescheduling rescheduled?
As of this writing, the federal agency tasked with implementing U.S. narcotics law, the DEA, was about to close the administrative hearing on the proposed rescheduling of non-medical marijuana.
As with most developments in weed legal reform, the DEA is certain to be very deliberate (i.e., slow) in rendering a decision. Which, no matter what, will surely be challenged by determined lobbyists in either the pro- or anti-reform camp.
I feel that given public sentiment and the fact that meaningful cannabis legal reform is an easy political win, it’s almost inevitable that recreational pot will be rescheduled too. But we still have a long road ahead of us.
Meanwhile, the escape from the heavy burdens of IRS Section 280E is a small win for certain medical pot purveyors; it’s just too bad this brings a host of new headaches to the companies affected.
As it stands now, the fortunes of Canopy Growth and Tilray won’t shift significantly because of the DEA’s move (Green Thumb is something of a black box, due to the lack of detail about its medical business). Ultimately, I wouldn’t change my cautious view on any of the three because of it.
