Cannabis Stocks Show Signs of Rebound as Policy Shift Sparks Optimism

Cannabis stocks and ETFs have been among the worst-performing groups in recent years. They peaked in 2021 during a speculative frenzy and a rush to gain exposure to the sector that ended in heavy selling. Since then, the sector’s cannabis stocks have mostly been in long-term downtrends.

However, that could be about to change, as the White House has reportedly asked federal agencies to move toward reclassifying cannabis from a Schedule I drug, like heroin, to a Schedule III drug, like some pain relievers.

Cannabis stocks from IPO euphoria to historic decline

Tilray Brands, Inc. is a global packaged goods company focused on cannabis, alcoholic beverages, and wellness products. It researches, cultivates, processes, and distributes medical and adult-use cannabis products and operates worldwide. Its stock went public in July 2018, opening at $297.70.

It quickly climbed to a peak near $3,000 and has been in a downtrend ever since, eventually reaching a low of $3.51 in June 2025. At that low, the stock had fallen 99.9% from its 81-month high. New federal legislation could be the catalyst needed to halt and reverse that decline.

The momentum is building in a key resistance zone

TLRY stock climbed to a 10-week high of $8.16 on Tuesday amid high volume. It registered its highest volume since mid-December: more than five times the 20-day moving average.

The 50-day moving average rebounded during the advance for the first time since it broke in mid-December, triggering a one-month bullish reversal above $7.75. Resistance is observed at the confluence of a descending trendline, the 100-day moving average (now at $8.06), and the price structure near a lower high of $8.31 from February.

A reversal pattern emerges after a deep correction

The advance follows the first corrective low after an impulsive rally of approximately 564% in just 15 weeks from the June low. Support was observed near the 88.6% Fibonacci retracement of that impulsive leg. Subsequently, two weeks ago, an upward breakout from a descending wedge pattern triggered a major reversal.

Bullish trigger and projected target

If TLRY can maintain its strength, there’s a possibility of initially reaching the top of the wedge and the lower high at $15.70. The next bullish signal would come above $8.31. That would trigger a retracement of a trendline and the 100-day moving average, potentially propelling the cannabis stock toward that key $15.70 level and validating the broader sector resurgence amid the reclassification push.

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(Featured image by Jakub Zerdzicki via Unsplash)

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