Weed stocks jump in European trading as investors eye potential U.S. marijuana law changes under Trump

14 December 2025

Cannabis stocks surged in European markets on Monday, December 15, 2025, as traders and investors reacted to reports that U.S. President Donald Trump may soon move to ease federal restrictions on marijuana, sending ripple effects through the legal pot sector and reigniting long-simmering hopes for regulatory relief that could reshape a beleaguered industry. Early trading saw shares of major cannabis companies climb sharply as optimism around possible federal policy shifts eclipsed broader market pressures, with one leading firm hitting multi-month highs and several others extending gains from late last week. The rally underscored how closely global markets are watching Washington’s evolving stance on cannabis policy and how powerful expectations of regulatory reform can be for asset prices in the sector.

In Frankfurt trading, Canadian cannabis giant Canopy Growth led the charge, with its shares rising as much as 17.9 percent to the highest level since May, building on a nearly 49 percent surge on Friday that was triggered by news reports suggesting imminent federal action. Other well-known pot producers such as Tilray Brands and SNDL also posted notable gains, albeit more modestly, before trimming back some of their advances later in the session as profit-taking set in. Canopy Growth’s stock was among the most actively traded on the German Tradegate platform, signalling strong retail investor engagement alongside other popular names like semiconductor maker Nvidia and defence group Rheinmetall.

The renewed enthusiasm for cannabis stocks is rooted in detailed reporting by major outlets, including The Washington Post and CNBC, that President Trump is preparing to direct federal agencies to reclassify marijuana from its current Schedule I status under the Controlled Substances Act to Schedule III, a category typically reserved for substances with accepted medical use and moderate abuse potential, like certain prescription painkillers. This shift could significantly reduce federal oversight and regulatory hurdles for marijuana and its derivatives, offering industry participants greater flexibility and easing burdens that have long restricted their operations.

At present, marijuana remains classified alongside drugs such as heroin and LSD at the federal level, even though a majority of U.S. states have enacted their own legal frameworks for recreational or medical use. This federal status has hindered broader industry development by limiting access to banking services, restricting research opportunities, and imposing punitive tax treatment under Section 280E of the Internal Revenue Code, which bars most cannabis firms from deducting common business expenses. Reclassifying marijuana as Schedule III would not legalise it outright on a federal basis, but it could alleviate several longstanding challenges facing the sector and improve financial conditions for companies struggling with regulatory uncertainty.

Analysts suggest that the potential reclassification would open the door to a wave of new opportunities for cannabis producers and related firms. By reducing the severity of federal restrictions, companies might be better positioned to secure investment, access traditional credit markets, and pursue partnerships with pharmaceutical firms looking to develop cannabinoid-based medicines. TD Cowen analyst Jaret Seiberg noted that such a policy shift could facilitate greater clinical research and expand the permissible use of cannabis products alongside other prescription drugs, though he also noted that the fundamental patchwork of state-level regulation would remain in place.

The U.S. cannabis sector has endured a tough stretch in recent years, marked by regulatory ambiguity, financial headwinds and a prolonged downturn in share prices after the 2021 peak. Once high-flying names saw valuations collapse as oversupply, lack of institutional investment and federal inaction weighed on performance. Against that backdrop, even modest signs of potential federal relief can have an outsized impact on sentiment, drawing short-term inflows from traders betting on policy-driven rebounds and longer-term interest from investors anticipating structural improvements.

European trading floors mirrored this shift in sentiment on Monday, with cannabis stocks drawing attention amid broader gains in equities as markets reacted to mixed global news, from expected central bank decisions to delayed U.S. economic data that could shape policy outlooks. While the broader pan-European STOXX 600 index edged into positive territory for the day, cannabis companies were among the standout movers, with their gains punctuating a trading session influenced by both macroeconomic and sector-specific dynamics.

Despite the optimism reflected in stock prices, official confirmation of federal action remains pending. White House officials have cautioned that no final decisions have been made regarding the rescheduling of marijuana, emphasising that any such move would require careful legal and regulatory steps before it could take effect. That uncertainty underscores the delicate dance between market expectations and policy reality in a space where political considerations and legal frameworks intersect.

For many in the cannabis industry, even incremental policy progress would be welcome. The difficulty in accessing banking services has forced many companies to operate largely in cash or seek expensive alternative financing, constraining growth and exposing them to risks that more mainstream businesses do not face. A shift to Schedule III status could lower the barriers to capital, encourage institutional investor participation and reduce the tax drag that has made profitability elusive for many operators.

However, industry watchers also urge caution. A move to ease federal restrictions would not erase the complexity of navigating 50 distinct state regulatory regimes, and companies would still face a patchwork of laws governing production, sales, advertising, testing and distribution. Moreover, full federal legalisation, including interstate commerce, would require congressional action beyond executive orders or administrative reclassification.

Still, the market’s reaction in Europe and beyond highlights how powerful policy expectations can be for investor behaviour, particularly in sectors where regulatory outcomes are tightly linked to growth prospects. In this case, the mere possibility of a shift in U.S. cannabis policy has sparked renewed interest and lifted spirits among shareholders and speculators alike. How long that optimism endures will depend on whether policymakers follow through with substantive changes that can fundamentally alter the operating landscape for an industry long constrained by federal law.