Cannabis Stocks Rally on Trump's Plans to Reschedule Marijuana

US cannabis stocks have rallied as President Trump signaled plans to reschedule marijuana from Schedule I to Schedule III. This move is expected to unlock near-term financial relief and longer-term growth for the industry. Trump's support could sway lawmakers to advance bills for banking protections, medical access, and interstate trade. The reclassification of cannabis could also change the consumer landscape, posing a headwind to alcohol companies. Tilray Brands is best positioned to gain from regulatory progress.

US cannabis stocks have experienced a significant rally following President Trump's signal to reclassify marijuana from Schedule I to Schedule III. This move is anticipated to bring near-term financial relief and long-term growth prospects for the industry. The reclassification could prompt lawmakers to advance bills for banking protections, medical access, and interstate trade, significantly impacting the cannabis sector.

Tilray Brands (NasdaqGS:TLRY) is particularly well-positioned to benefit from these regulatory advancements. The company's shares surged after the announcement, reflecting investor optimism about the potential for looser restrictions and greater access to medical cannabis [1]. Tilray's partnership with Molteni to expand into Europe also signals a significant pivot for the cannabis sector, putting Tilray in the spotlight [1].

Despite a challenging year, Tilray's stock has shown remarkable resilience. It was down more than 38% over the past twelve months but surged more than 159% in the past three months, marking the sharpest momentum in years [1]. The company has also launched new products in its beverage and spirits portfolio and continues to focus on operational improvements, contributing to the recent rally.

However, not all analysts are bullish on Tilray's valuation. According to the community narrative, Tilray Brands is seen as overvalued by about 24% when compared to its fair value, taking into account anticipated growth, margins, dilution, and analyst price targets [1]. This perspective is built around projected improvements in profitability, international expansion, and category diversification, but execution risks remain.

A discounted cash flow (DCF) model suggests a different outlook, indicating a potential mismatch in market expectations [1]. This approach considers future cash flows and signals a different fair value estimate.

In conclusion, the recent rally in Tilray Brands reflects investor optimism about regulatory changes and international expansion. However, the stock's valuation remains a topic of debate among analysts. Investors should closely monitor the company's performance and the regulatory landscape to make informed decisions.

References:
[1] https://finance.yahoo.com/news/tilray-tlry-valuation-focus-u-103049915.html