Is Tilray stock price rally a trap? history suggests selling

Tilray Brands stock price has gone vertical this week, joining other cannabis companies like Canopy Growth, Curaleaf, and Truelive. TLRY surged to a high of $1.06, its highest level since February, and up by 200% from its lowest point this year. 

Why the Tilray Brands stock is soaring

The TLRY stock price is in a strong uptrend this week as the cannabis industry appears to have an unlikely ally in Donald Trump after spending millions of dollars in lobbying. 

Trump is considering reclassifying of marijuana at the federal level, a move that would move it to a less dangerous category. This aligns with the efforts of the Joe Biden administration through the DEA. 

In a statement, Trump said that he would decide in the coming weeks. He cited the good things he has heard about medical marijuana and the bad ones he has seen over the years.

A move to reclassify cannabis would have a major impact in the industry and the Tilray stock price. For one, it would make it easier for these companies to do business across state lines. Most importantly, it would enable them to bank in major national companies.

Reclassification and more friendly regulations would be highly bullish for Tilray Brands because its cannabis business does not have a presence in the United States. The company has insisted that it will only do business in the country when there are friendly regulations. 

Risks for cannabis stocks

Still, there is a risk that these stocks could crash soon as they have done in the past when there was optimism about reclassification. For example, most cannabis stocks jumped after Joe Biden launched his reclassification efforts and then crashed as the process dragged.

Similarly, they all soared after Senate Majority Leader talked of the cannabis banking bill that he was pushing. Eventually, he decided not to table it because Democrats did not have a majority. 

The other risk is that Trump has not made his decision yet and he is known to change his views based on who he talks to last. As such, it is not a done deal that he will support the reclassification. 

Most importantly, Trump will likely listen to right-wing commentators, many of whom oppose the move. For example, top popular figures like Charlie Kirk and Tucker Carlson have opposed such moves in the past.