Why Tilray Stock Lit Up Today

Tilray Brands (NASDAQ: TLRY) stock went up like a rocket this morning, soaring 25% through 10:15 a.m. ET -- and the stock was up even more in the very early morning.

You can thank President Trump for the gains -- because according to The Washington Post, he's about to legalize marijuana (sort of).

Image source: Getty Images.

President Trump's Christmas gift to marijuana investors

It's not 100% official yet, but citing six sources this morning, the Post reported that President Trump will issue an executive order instructing the Justice Department to reclassify marijuana as a Schedule III drug (i.e., no longer Schedule I) as early as January. This will set in motion a process to reduce the regulation of weed, such that it's treated much like "common prescription painkillers and other drugs," and less like drugs such as heroin or LSD.

Such a move would also not legalize marijuana per se, nor even "decriminalize" it. But as CNBC points out, the move would make it easier for banks to provide ordinary banking services to marijuana companies, for example. It would put these businesses under less restrictive tax obligations. And it would permit states to (legally, this time, from a federal perspective) regulate use of the drug.

Is Tilray stock a buy?

What does this mean for Tilray stock in particular? Well, any lessening of the regulations surrounding marijuana will obviously make it easier for companies to do business with the drug. That's going to increase (legal) demand for marijuana, and probably boost Tilray's sales -- and profits.

My main concern here is that marijuana is already legal in Canada, for example, which is Tilray's home market, and yet that fact hasn't sufficed to turn Tilray profitable. Tilray hasn't earned a cent since 2018.

Rescheduling marijuana in the U.S. might change that -- but it also might not.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool recommends Tilray Brands. The Motley Fool has a disclosure policy.