Trump's Cannabis Reclassification: Can Green Thumb, Tilray, and Trulieve Turn Policy Gains Into Real Profits?

Understanding the Federal Shift

December 18, 2025 marks a watershed moment for the U.S. cannabis sector. President Trump signed an executive order directing Attorney General Pam Bondi to reclassify marijuana from Schedule I to Schedule III status — a move industry observers are calling the most consequential federal cannabis policy change in half a century.

The distinction matters significantly. Schedule I designation has historically meant “no accepted medical use and high abuse potential.” Schedule III, by contrast, acknowledges “moderate to low potential for dependency” and recognizes legitimate medical applications. This reclassification reflects the on-ground reality: 40 U.S. states plus D.C. and three territories have already legalized medical cannabis.

However, Trump clarified an important caveat: the reclassification “does not legalize recreational marijuana or endorse its non-medical use.” The move operates within legal boundaries that have existed since President Nixon’s 1970 Controlled Substances Act.

The Financial Mechanics: Who Benefits and How

The three cannabis operators — Green Thumb Industries (OTC: GTBIF), Tilray Brands (NASDAQ: TLRY), and Trulieve Cannabis (OTC: TCNNF) — stand to gain substantially through one specific avenue: potential exemption from IRS Code Section 280E.

This tax code section has long been the industry’s financial straitjacket. It prohibits cannabis businesses from deducting ordinary operating expenses like payroll, rent, and utilities. For heavily-staffed retail operations managing multiple locations, this creates a significant tax burden.

Should the reclassified status trigger 280E relief, the profit implications cascade broadly. Companies could reinvest savings into marketing expansion, driving top-line revenue growth. Additionally, improved federal clarity may unlock financial services access. Banks have historically avoided cannabis partnerships due to conflicting state-federal legal status. Reclassification removes that regulatory ambiguity.

Tilray’s response illustrates the optimism: the company announced expanded U.S. medical cannabis operations following the White House announcement.

The Profitability Question Remains

Yet policy tailwinds don’t automatically translate to shareholder returns. Each company presents distinct challenges:

Tilray carries a substantial loss profile. The Canadian operator reported a $793.5 million net loss in Q3 2025, signaling that operational fundamentals remain stressed despite favorable policy conditions.

Trulieve, based in Florida, similarly shows red ink — posting a $27 million Q3 net loss. Policy support alone hasn’t resolved underlying business challenges.

Green Thumb trades at a forward P/E ratio of 34.6, which some investors may view as expensive relative to peers or broader market alternatives, especially given the cannabis sector’s inherent volatility.

Investment Consideration: Policy Catalyst vs. Business Fundamentals

The marijuana reclassification represents a critical positive catalyst for these companies. However, it remains just one variable among many. Investor due diligence requires examining each stock individually: profitability trajectory, competitive positioning, debt levels, and valuation multiples all deserve scrutiny.

Favorable federal policy creates opportunity, but opportunity alone doesn’t guarantee returns. Cannabis companies must still demonstrate operational execution and path to sustainable profitability.