What Happened?
Shares of cannabis company Tilray Brands (NASDAQ: TLRY) jumped 18.6% in the morning session after Jefferies raised its price target on the stock amid growing optimism over a potential shift in U.S. federal cannabis policy.
The investment bank Jefferies increased its price target for Tilray to $2.00 from $1.50, maintaining a Buy rating, based on the potential for cannabis to be rescheduled from a Schedule I to a Schedule III substance in the U.S.
This optimism follows comments from President Trump that his administration was reviewing the classification. While short of full legalization, such a shift would be a significant federal policy change. For cannabis companies, rescheduling could lead to substantial benefits, including lower tax burdens by allowing for normal business expense deductions and enabling easier research opportunities. Jefferies identified Tilray as potentially the "biggest potential beneficiary" from these regulatory developments. The positive sentiment has lifted cannabis stocks across the board, also fueled by renewed hopes for the passage of SAFE Banking legislation, which would grant cannabis firms access to traditional banking services.
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What Is The Market Telling Us
Tilray’s shares are extremely volatile and have had 65 moves greater than 5% over the last year. But moves this big are rare even for Tilray and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 11 days ago when the stock dropped 6.4% on the news that markets pulled back amid hotter-than-expected inflation data. The main concern for investors was the July Producer Price Index (PPI), a measure of wholesale inflation. The higher-than-expected reading suggests that companies could face squeezed profit margins due to rising costs. This also reduces the likelihood of the Federal Reserve cutting interest rates, which could further dampen economic activity. Compounding these inflation fears are multiple reports signaling a weakening consumer.
Tilray is down 9.9% since the beginning of the year, and at $1.32 per share, it is trading 29.3% below its 52-week high of $1.86 from August 2024.
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