Cannabis stocks have staged a strong rally in recent sessions as speculation grows around potential U.S. regulatory reform. Reports that the Trump administration may reclassify marijuana from Schedule I to Schedule III have lifted sentiment across the sector, easing concerns about restrictive tax codes and limited banking access.
Tilray (TLRY): Volatile but Positioned for Policy Upside
Tilray Brands (NASDAQ: TLRY) has once again found itself at the center of investor speculation. The stock jumped nearly 18% last week after Jefferies raised its price target from $1.50 to $2.00, citing the company as one of the biggest potential beneficiaries of U.S. rescheduling. Jefferies maintained its Buy rating, noting that a shift to Schedule III could allow Tilray and peers to deduct ordinary business expenses, cutting effective tax burdens and improving profitability.
The optimism followed earlier comments from President Trump confirming his administration is actively reviewing cannabis’ federal classification. Although this falls short of full legalization, even partial reform could be a watershed moment for cannabis operators.
However, the fundamental backdrop remains less encouraging:
- Revenue Miss: Q2 revenue came in at $224.5M, down 2.3% year-over-year, falling short of analyst expectations. This was the weakest relative performance among major beverage, alcohol, and tobacco peers.
- Margins Under Pressure: Gross margin and EPS both missed analyst estimates, underscoring the cost challenges Tilray faces despite diversification efforts.
- Peer Comparison: While Tilray struggled, Celsius (CELH) delivered 83.9% YoY growth, demonstrating the widening gap between cannabis and higher-growth beverage peers.
From a technical perspective, TLRY’s chart paints a different story:
- Short-Term Strength: The stock has broken above its long-term descending trendline, reclaiming the $1.20 support zone and now testing resistance at $1.45–1.50.
- Momentum Indicators: RSI is elevated around 70, suggesting strength but nearing overbought conditions. PPO momentum is bullish, with widening separation pointing to strong trend continuation.
- Volume Confirmation: Trading volume has surged in recent weeks, indicating real accumulation behind the move.
- Upside Targets: A confirmed breakout above $1.50 opens the door toward $1.83, $2.00, and $2.17.
On the long-term chart, however, TLRY remains deeply depressed, down from highs above $60 in 2018 and still trading below many historical resistance levels. This highlights the speculative nature of the stock — massive potential upside if reforms pass, but a history of persistent underperformance.
MJ ETF: Sector-Wide Breakout
The ETFMG Alternative Harvest ETF (MJ), a diversified cannabis fund, has mirrored TLRY’s rally. After bottoming near $15 earlier in 2025, MJ has surged past $30 and is now pressing resistance around $37–38.
- Technical View: MJ has reclaimed its 50-day and 200-day moving averages for the first time in years. RSI sits near overbought levels but momentum remains bullish.
- Volume Surge: The recent rally has been accompanied by some of the heaviest volume since 2021, reflecting institutional inflows into the sector.
- Key Level: A breakout above $38–44 would mark a structural shift, potentially confirming a new long-term bullish trend in the cannabis space.
Sector Outlook: Reform Is the Key Driver
- Policy Catalyst: The shift from Schedule I to III would reduce tax burdens and improve access to banking, with the SAFE Banking Act also back in discussion.
- Investor Sentiment: Cannabis remains one of the most speculative sectors — TLRY alone has seen 66 moves greater than 5% in the past year.
- Earnings Drag: Many cannabis companies remain unprofitable and miss estimates, which leaves them reliant on policy headlines to drive rallies.
Bottom Line
Tilray is once again trading like a high-risk, high-reward proxy for U.S. cannabis reform. Its fundamentals remain weak relative to peers, but technical momentum suggests more upside if $1.50 resistance breaks. The MJ ETF, meanwhile, offers broader exposure to the sector’s rebound, with $37–44 acting as a major breakout zone.
📊 Key Levels:
- TLRY: Support $1.20 / Resistance $1.50, $1.83, $2.00
- MJ ETF: Support $30 / Resistance $37, $44
📰 Catalysts: U.S. cannabis rescheduling, SAFE Banking reform, Jefferies upgrade, Trump administration policy review
⚖️ Risks: Revenue contraction, high volatility, uncertain timelines for federal reform
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