Shares of cannabis company Tilray Brands (NASDAQ:TLRY) fell 5.8% in the morning session after investors took profits after a significant rally in the previous session.

The pullback follows a 17% surge the previous day, which was driven by speculation regarding potential cannabis reclassification policies. Adding to the positive sentiment the previous day, analysts at Jefferies raised their price target on the stock to $2.00. With no new negative news to account for the drop, today's decline appears to be a technical move as traders cash in on the recent sharp gains.

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Tilray’s shares are extremely volatile and have had 65 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The previous big move we wrote about was 1 day ago when the stock gained 3.2% on the news that the cannabis sector experienced a broad rally fueled by growing optimism for U.S. cannabis reform, further bolstered by a bullish update from a Jefferies analyst. The positive sentiment is largely tied to reports that the Trump administration is considering reclassifying marijuana from its current Schedule I status to the less restrictive Schedule III category. This potential policy change could eliminate significant banking, tax, and operational hurdles for cannabis companies. Adding to the momentum, Jefferies analyst Kaumil Gajrawala reiterated a Buy rating on Tilray and increased the price target from $1.50 to $2.00, amplifying investor confidence in the stock's potential upside.

Tilray is down 6% since the beginning of the year, and at $1.37 per share, it is trading 24.2% below its 52-week high of $1.81 from September 2024.

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