Shares of Tilray Brands (TLRY) moved back into positive territory after slipping earlier this week. The latest swings came after President Trump confirmed that his administration is actively considering reclassifying marijuana as a less dangerous drug. TLRY stock surged more than 27% on Tuesday and was up another 5% in premarket trading today. Over the past five trading days, the stock has climbed roughly 75%.
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Following the latest reports, cannabis stocks jumped more than 30% in premarket trading last Friday. This could be a déjà vu moment for investors, as similar reports emerged in August when Trump discussed reclassifying marijuana as a less dangerous drug, sparking a rally in cannabis stocks.
What Could This Mean for the Cannabis Sector?
Under the proposal, marijuana would be reclassified as a Schedule III drug, a category reserved for substances with recognized medical benefits and a lower risk of abuse. Currently, U.S. law places cannabis in Schedule I under the Controlled Substances Act, grouping it alongside highly dangerous drugs such as heroin.
Reclassifying marijuana as a Schedule III drug could significantly benefit cannabis companies by reducing their tax burden and expanding access to banking services, including allowing customers to make purchases using credit cards.
Is Tilray a Good Stock to Buy?
Overall, Tilray’s shares have remained volatile in the past year. Meanwhile, Tilray’s financials remain weak, even though the company has made progress in streamlining its operations and significantly cutting costs.
Notably, Tilray Brands reported Q3 revenue of $209.5 million, a 4.7% increase from last year. However, the company has been burning cash due to heavy reinvestment. Tilray reported a negative cash flow of $10.86 million in Q3.
Still, for investors with a high risk tolerance and a long-term outlook, the stock may be worth owning. If federal legalization moves forward, Tilray’s business could be meaningfully transformed.
What Is the Price Target for TLRY?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on TLRY stock based on two Buys and one Hold assigned in the past three months. Furthermore, the average Tilray stock price target of $7.00 per share implies a downside of 50% from the current level.
