The Washington Post first reported that the president is expected to direct agencies to reclassify cannabis as a Schedule III drug.

The move would make it similar to some common prescription painkillers, the newspaper says. A reclassification of the drug in the U.S. could offer an opportunity for Canadian cannabis companies to expand their businesses stateside.

Shares of Tilray Brands Inc. jumped 29 per cent or $3.35 to $14.94 in mid-morning trading Friday on the Toronto Stock Exchange, while Canopy Growth Corp. shares were up 32 per cent or 49 cents at $2.07. Aurora Cannabis Inc. shares were up 13 per cent and Organigram Global Inc. was up nearly 10 per cent.

While many states have passed laws legalizing cannabis for adult use in the U.S., federally it remains a Schedule I drug, the same category as heroin and LSD.

Trump is expected to issue an executive order as soon as Monday that would allow for reclassification of cannabis, CNBC reported, citing a source familiar with the matter.

Trump plans to direct agencies to reclassify cannabis as a Schedule III drug, the Washington Post reported on Thursday, reducing oversight of the plant and its derivatives to the same level as some common prescription painkillers and other drugs.

"We believe this would open the door for pharmaceutical companies to seek approval for more cannabis products, which could then be dispensed the same as other prescription drugs," TD Cowen analyst Jaret Seiberg said in a note.

Trump's administration has been looking to reclassify cannabis as a less dangerous drug, a shift that could ease criminal penalties and reshape the industry through potentially lower taxes and by making it easier to secure funding.

Funding remains one of the biggest challenges for cannabis producers, as federal restrictions keep most banks and institutional investors out of the sector, forcing pot producers to turn to costly loans or alternative lenders.

This sets the stage for several catalysts, including "additional states legalizing cannabis, safer banking being passed, and the ultimate uplisting of plant-touching cannabis stocks to major US exchanges", Alliance Global Partners analyst Aaron Grey said.

Under the Controlled Substances Act, cannabis is listed as a Schedule I substance, implying it has a high potential for abuse and no currently accepted medical use.

Last year, the Biden administration asked the Department of Health and Human Services to review cannabis's classification, and the agency recommended moving it to Schedule III classification.

The Drug Enforcement Administration has to review the recommendation and will decide on the reclassification.