Pot Stocks Plunge After Rally: Is Betting on Rescheduling Worth the Risk?

From Hype to Hiccups in the Cannabis Craze

Once hailed as the “next big thing,” cannabis stocks in 2018-2019 were the artificial intelligence stock darlings of their day, riding a wave of euphoria over impending federal legalization in the U.S. 

Companies like Canopy Growth (NASDAQ:CGC), Tilray Brands (NASDAQ:TLRY), and Aurora Cannabis (NASDAQ:ACB) saw valuations soar into the billions as investors bet on a green revolution. Yet, years later, federal legalization remains elusive, leaving the industry in a haze. Despite 45 states legalizing marijuana for medical or recreational use, federal restrictions keep cannabis stocks volatile and unprofitable. 

Yesterday, a spark reignited: CGC surged 24%, TLRY jumped over 7%, ACB climbed 5%, and Cronos Group (NASDAQ:CRON) edged up nearly 2%. President Trump recently said he would make a decision on rescheduling marijuana “within weeks” and Congressional Democrats just filed a bill to deschedule cannabis entirely. Today, though, these stocks are all in retreat with shares falling sharply. That raises the question: Is it still worth betting on federal action?

The Rise and Fall of Cannabis Giants

The cannabis boom seven years ago was electric. Canopy Growth, Tilray, and Aurora Cannabis were Wall Street’s darlings, with market caps rivaling established industries. Canopy peaked at $17 billion, Tilray hit $13 billion, and Aurora wasn’t far behind at $10 billion. 

Legalization in Canada and state-level progress in the U.S. fueled dreams of a global cannabis empire. But federal inaction, oversupply, and brutal competition slashed valuations. Today, these former titans trade pretty much as penny stocks — CGC goes for $1.67 per share, TLRY, $1.38 per share, and ACB is the priciest of the at $5.36 per share — all down 80% to 90% from their highs. Investors who bought at the peak are nursing heavy losses, and profitability remains a distant goal. 

Investors need to ask whether recent political developments signal a turnaround or just another false dawn.

Canopy Growth: Betting on U.S. Exposure

Canopy Growth was once the poster child for cannabis optimism. Its U.S. strategy via Canopy USA, with stakes in Acreage Holdings and Wana Brands, positions it for growth if federal rescheduling occurs. Rescheduling to Schedule III would eliminate the punitive IRS Code 280E, allowing tax deductions and boosting margins. 

Canopy’s fiscal Q1 2026 results showed a 43% rise in Canadian cannabis sales, while medical cannabis was up 13%. Despite a 38% year-to-date stock drop, analysts see upside if rescheduling unlocks U.S. markets. However, Canopy’s $72.1 million quarterly revenue and persistent losses highlight its fragility.

Tilray Brands: Diversified but Diluted

Tilray Brands has pivoted from pure cannabis to a broader consumer goods model, becoming the fifth-largest U.S. craft brewer through acquisitions like Shock Top in 2023. However, its fiscal Q4 2025 revenue fell 2.3% to $224 million, but net losses widened to $1.27 billion. 

Tilray’s global cannabis leadership and logistics network give it an edge, but its U.S. exposure is limited since federal law bars interstate cannabis trade. Rescheduling could ease tax burdens, but analysts warn it won’t fully bridge the gap to profitability. TLRY’s volatility — down 21% over the past year, but nearly quadrupling in value from its June bottom — makes it a risky bet.

Aurora Cannabis: Leaner but Still Lagging

Aurora Cannabis has streamlined operations, reporting $98 million in fiscal Q1 2026 revenue, up 17% year-over-year, but returning to losses of $19.9 million from profits of $3.7 million. Its medical cannabis segment grew 37%, but Aurora’s focus remains Canada and Europe, with minimal U.S. presence.

Rescheduling could spur research and medical adoption, but Aurora’s virtual penny-stock status and history of losses temper optimism. Its stock’s gyrating swings on a day-to-day basis reflects the sector’s sensitivity to news.

Key Takeaway

Should investors buy cannabis stocks on rescheduling hopes? The answer hinges on risk tolerance. Rescheduling could ease tax burdens, improve banking access, and spur growth, potentially lifting CGC, TLRY, and ACB. But the sector’s history of broken promises, persistent losses, and today’s sharp retreat — CGC down 10%, TLRY 6%, ACB 5% — suggest caution. 

Trump’s decision is uncertain, and the Democrats’ descheduling bill faces a tough Congress. A group of Republicans wrote a letter to Trump opposing any rescheduling, let alone descheduling.

With valuations still depressed and profitability elusive, cannabis stocks are a speculative play. Their time as growth darlings may have passed, but a small, disciplined bet could pay off if federal reform materializes. For most, waiting for clearer signals is the safer move.

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