What happened
Canadian pot company Tilray Brands (TLRY 3.96%) has been preparing for marijuana legalization in the U.S. to vault its business to another level. Some news today has investors thinking federal legalization may be closer. That report sent shares of Tilray soaring more than 20% midday. As of 3:23 p.m. ET, the stock was still higher on the day by 10.5%.
So what
Bloomberg News initially reported that a letter was sent yesterday from the U.S. Department of Health and Human Services to the Drug Enforcement Agency (DEA) asking for marijuana to be reclassified as a Schedule III drug from its current Schedule I status.
Schedule I drugs include those without medical uses such as heroin and LSD. Those classified as Schedule III drugs on the controlled substances list include Tylenol and Codeine. Tilray investors have been frustrated by a lack of progress in federal marijuana legalization. If that reclassification to a less hazardous category occurs, it could be one step closer to legalizing cannabis in the U.S.
Now what
A DEA spokesperson acknowledged receiving the letter directed by a request from President Joe Biden. "[Health and Human Services] conducted a scientific and medical evaluation for consideration by DEA," the spokesperson said. The DEA is now beginning a review and has the final say in the classification status.
The move would benefit Tilray and other Canadian cannabis companies should it eventually open up recreational use of marijuana in the U.S. at the federal level. Tilray already has craft beer and distillery businesses in the U.S. including several that were recently purchased from Anheuser-Busch InBev. They would provide an established distribution network for the company.
With Tilray stock down 31% over the past year, any potential steps toward legalization has investors getting excited for its potential future prospects.
