Canopy Growth Soars 54% on Marijuana Reclassification Plans. Time to Buy?[Stocks](https://moneymorning.com/category/article/stocks/) # Canopy Growth Soars 54% on Marijuana Reclassification Plans. Time to Buy?  by Rich Duprey  December 15, 2025  Share it: Shares of **Canopy Growth** ( [CGC](https://moneymorning.com/stocks/cgc/)) skyrocketed 54% on Friday, leading a broad rally across the cannabis sector where peers posted large double-digit gains. The surge came after reports that President Donald Trump intends to sign an executive order directing federal agencies, including the Justice Department and Health and Human Services, to reclassify marijuana from Schedule I to Schedule III under the Controlled Substances Act. This move would acknowledge cannabis's accepted medical uses and moderate abuse potential, aligning it with substances like ketamine or codeine. For years, marijuana stocks have languished amid federal inaction on reclassification or broader decriminalization, despite widespread state-level legalization. With 38 states permitting medical use and 24 allowing recreational sales, the $32 billion U.S. industry has faced crippling restrictions. Now, with executive action appearing imminent, investors are piling in. But does this catalyst make CGC a compelling buy? ## Trump's Executive Push and Industry Tailwinds The reclassification plan emerged from a high-level Oval Office discussion involving Trump, House Speaker Mike Johnson, HHS Secretary Robert F. Kennedy Jr., CMS head Mehmet Oz, and cannabis executives. While Johnson voiced concerns over youth impacts, industry leaders countered with evidence of medical benefits for conditions like pain, epilepsy, and PTSD, backed by polls showing 70% public support for reform. Unlike full legalization, which requires Congress, rescheduling delivers immediate practical benefits. Most critically, it eliminates Section 280E tax penalties, allowing companies to deduct ordinary business expenses. This could boost after-tax profits by 40% to 70%, freeing substantial cash for growth and expansion. Additional advantages include eased research barriers for clinical trials, potential pharmacy dispensing with federal oversight, smoother interstate transport, and improved banking access as federal risks diminish for lenders. Analysts project these changes could accelerate industry growth to 20% annually, though full implementation may take as many as 18 months due to rulemaking. The current Schedule I status has long stifled scalability, blocking institutional investment and creating a fragmented regulatory landscape amid thriving state markets exceeding $30 billion in annual sales.  ## Opportunities and Risks for Canopy Growth As a leading player with approximately $300 million in trailing revenue and established profitability in Canadian medical sales, Canopy Growth stands to gain significantly. Rescheduling could add $50 million to $70 million in annual tax savings, enabling FDA-approved trials for its vaporizers and oils. Its Spectrum Therapeutics brand, already strong in markets like Australia and Poland, positions CGC for leadership in global medical cannabis. Projections suggest a potential 30% lift in EBITDA by 2027, with partnerships facilitating deeper U.S. entry. Peers like **Tilray Brands** ( [TLRY](https://moneymorning.com/stocks/tlry/)) could see 25% stock upside from research advancements, while **Aurora Cannabis** ( [ACB](https://moneymorning.com/stocks/acb/)) targets 15% revenue growth through enhanced banking and product scaling. However, challenges remain: illicit markets compete fiercely, as seen in Canada's post-legalization experience, and potential Congressional resistance or state-federal conflicts could delay benefits. Stock volatility remains high in this headline-driven sector. ## Bottom Line Reclassification offers meaningful relief – tax advantages, banking normalization, and research legitimacy – that could transform profitability for operators like CGC. Yet it falls short of full decriminalization or legalization, leaving recreational markets vulnerable and not resolving all hurdles like black-market competition or regulatory delays. For long-term investors [tolerant of volatility](https://moneymorning.com/2025/06/24/canopy-growth-cgc-remains-volatile-but-a-reversal-signal-has-emerged/), CGC presents upside potential in a reforming industry, but it's not a risk-free buy amid ongoing uncertainties. **Beat the market, without relying on brokers or biased institutions.** Email(Required) Facebook This field is for validation purposes and should be left unchanged. Subscribe By submitting your email address, you will receive a free subscription to _Money Morning!_ and occasional special offers from us and our affiliates. 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