Cannabis stocks remain out of favor. It has been a long wait, but it is still too soon to give up on key federal reform that could help the sector and boost stocks. That’s the view of a top-five cannabis company CEO.

Meanwhile, states continue to make steady progress on legalization.

None of this should be a surprise. Polls consistently show that a majority of voters favor legalization. Many politicians at both the state and national levels are responding. Beyond polls, we see growing support for cannabis in consumer spending trends. Wallet share continues to rise. I provide more details on these trends below in the news roundup section.

The Senate Judiciary Committee recently approved the nomination of Terrance Cole to lead the Drug Enforcement Administration (DEA).

The full Senate may vote on Cole’s confirmation as soon as early June.

This could be the start of a significant turning point for cannabis stocks. That’s because Cole will address a Biden-era proposal to move cannabis to Schedule III from Schedule I under the Controlled Substances Act (CSA). The change would significantly enhance cannabis company cash flow by neutralizing an IRS rule that bars operating expense deductions against revenue from the sale of Schedule I substances.

Cannabis stocks continue to post sharp rallies on rumors of progress on federal policy developments like banking reform and rescheduling. Then the stocks give it all back over the next day or two.

There are two ways to deal with this trend.

The cannabis sector remains unloved as investors abandon hope that President Donald Trump will come through on his campaign promise to reschedule the drug.

Moving cannabis to Schedule III from Schedule I under the Controlled Substances Act would help cannabis companies by obviating an IRS rule that prohibits them from deducting operating expenses (Rule 280E).

I continue to think Trump will live up to his “promises made, promises kept” mantra. It will take some time, because he’s obviously active on many fronts, and cannabis reform does not rise to the level of top priority. Polls continue to show the majority of voters favor reform, particularly younger voters. So, there’s a favorable political angle for conservatives in cannabis reform. Cannabis sales growth continues to be particularly strong (6.2%) in Missouri, a red state.

Are promises made really promises kept, for President Donald Trump?

No one really knows, so cannabis equity investors remain depressed.

They can’t get any bullish signals from the administration on rescheduling, which Trump promised.

But there is a way to deal with this uncertainty as a cannabis investor. Shift your focus to getting paid to wait. I’ll explain why, and how, below.

As has been the case for the past decade, the fate of cannabis stocks lies largely in the hands of politicians.

Cannabis companies have been getting solid support from state-level politicians. Forty states now allow sales of medical cannabis.

Sure, they are permitting too many stores, and that is putting downward pressure on pricing. At some point, the market sorts that out. Prices will fall to a point where it is no longer that enticing to bring on new supply, yet companies will have gotten lean enough to produce profits. We are not there yet. But we will get there.

Cannabis stocks are set to close out the year with a punishing 14% decline. Cannabis investors need help from anywhere they can get it.

It looks like it could come from an unusual place in 2025. The future of the cannabis industry is now in the hands of President-elect Donald Trump.

If anyone told me a few years ago this would be the case, I might have asked them what they are smoking.

However, the reality is that during his presidential campaign, Trump endorsed all three of the main reforms that would legitimize the industry and boost cannabis share prices: Rescheduling, bank reform known as SAFER banking, and legalization of recreational use. Trump endorsed the first two outright. He implicitly endorsed legal rec-use because he supported the Florida referendum which would have made this change. At the very least, he has openly endorsed decriminalization.

Cannabis stocks are now trading like the group is no longer a viable sector.

I do not believe that is the case. True, companies continue to face pressure from price wars and unbridled issuance of permits for new stores in New Jersey and elsewhere.

But ultimately, the fate of cannabis businesses lies in the hands of politicians.

Given that the majority of Americans on both the left and the right favor cannabis legalization, it’s no surprise that marijuana has emerged as a significant campaign issue.

Therefore, it makes sense to think about election outcome scenarios and what they mean for cannabis investors.

Big picture, no matter what happens in the presidential election, cannabis wins. That’s because both candidates support major cannabis reform in one way or another. But obviously, some outcomes are better than others. Here are the three main scenarios, from best to worst.

Cannabis investors remain in a depressed state, despite several potentially bullish developments that could move stocks in the sector up significantly over the next year.

Talk about a terrible week for cannabis investors. The Drug Enforcement Agency (DEA), on Monday, torpedoed the sector by announcing a move that will significantly delay favorable legal reform.

What happened: The DEA now wants to hold a formal hearing on the Biden administration’s proposal to reschedule cannabis, before deciding what to do. The move dashed all hopes of rescheduling before the election – which many analysts had expected – since the hearing is set for December 2.

Cannabis is a highly politicized sector because it is extensively regulated.

The political news has been very good for cannabis. But cannabis investors have been slow to recognize this.

A late-July Fox News poll showed that Vice President Kamila Harris has caught up to and surpassed Donald Trump in five key swing states.

Cannabis stocks should have advanced on the news. Not only is Harris a better cannabis advocate than President Joe Biden, she’d obviously be more favorable to the sector than Trump.

Note: Due to a technical issue, publication of your Cabot Cannabis Investor update has been delayed by one day. We apologize for any inconvenience; future updates and issues will be delivered per the normal publishing schedule.

If you have been steadily averaging down in cannabis stocks during the sector’s dark days all year, well done.

You are finally being rewarded.

Cannabis companies remain in hunker-down mode as challenges persist. Those include price compression, competition from hemp-based THC product sales, and uncertainty about potential federal reform.

Not all cannabis companies are going to survive. Ayr Wellness (AYRWF) looks like it is about to go under. I’ve only ever kept a very small position in that name, so the company’s demise did not cause too much damage.

It’s cannabis company earnings season once again. Below, I summarize the highlights from our portfolio companies. But first, here are the major sector trends that emerged from the calls.

It’s time to buy stocks more aggressively.

That’s the case for stocks in general, but also cannabis stocks. Most cannabis companies aren’t really affected by tariffs. But their stocks have been hit recently by the shift to “risk-off” mode among investors.

It’s cannabis company earnings season. So, I highlight fourth-quarter results in this issue.

Before we get to the details, here are the key takeaways from earnings reports:

* Price compression continues, creating an ongoing “Hunger Games” environment in which only the financially strong will survive, given the debt levels at a lot of cannabis companies. Much of this debt comes due over the next two years. Bankruptcies might be the clearing event that helps bring an end to price compression. None of our names appear to be at risk, but no guarantees...

These are dark days for cannabis investors, maybe the darkest ever.

AdvisorShares Pure U.S. Cannabis (MSOS), one of the key benchmark exchange-traded funds in the space, is down 85% in the past five years against market gains of 80%.

As has always been the case, the fate of cannabis stocks is much more about politicians than the leadership and results at cannabis companies.

Here are my top eight predictions for the cannabis sector for 2025.

1. Cannabis rescheduling goes through

Promises made, promises kept. Trump loves a “deep state” challenge. Put these two together, and it seems probable that rescheduling could happen in 2025.

May the buyouts begin. Poor sentiment has pushed the values of cannabis companies so low, the strong are now buying the weak. Like the recent cannabis company insider buying, this is a signal that valuations may be close to bottoming here.

However, realistically, it could be a while before the sector recovers since we are dependent on politicians for progress.

The cannabis sector is taking a severe body blow because of election outcomes.

The big negative: Florida voters rejected Amendment 3, which would have legalized recreational use. Voters in North Dakota and South Dakota also rejected cannabis legalization.

Cannabis now has its highest election-year profile ever.

Both presidential candidates have highlighted their favorable positions on cannabis reform, obviously because voters in all the key swing states favor reform. Cannabis reform appears on the ballot in referenda in several states – most notably Florida.

Back on August 28 and September 3, I suggested buying cannabis stocks in the severe weakness that put a lot of cannabis investors in a deeply distressed state. I cited the excessive negativity and the potential for a bullish update from presidential candidate Donald Trump on his cannabis policy.

On September 9 we got the Trump update, and it was very bullish for the sector. Cannabis stocks moved up sharply.

The cannabis sector has a dream ticket with Kamala Harris and Tim Walz. Investors act like they haven’t even noticed. This seems like a big mistake.

The key takeaway: Cannabis stocks look buyable in the current bout of dramatic sector weakness. Cannabis investors are notoriously bipolar. Right now, they are in a dark mood. That’s usually been the best time to add to positions, especially when there are potential catalysts on the horizon like now. In today’s update, I outline the main ones and the possible timing.

Insiders at two of our Cabot Cannabis Plus Insider Portfolio names just made large purchases of their company’s stocks. Besides cannabis, I have followed insider activity overall for a few decades. These are significant buy signals, in my experience.

We continue to get positive signals out of Washington, D.C. for cannabis companies.

Cannabis stocks on Monday traded as if president-elect Donald Trump has abandoned his marijuana reform policies.

On Tuesday morning I suggested traders might want to take some profits in positions accumulated the week before, because of a possible dearth of catalysts on the near-term horizon. I also suggested maintaining long-term exposure to the group.

Back on August 28 after the close, I shared bullish commentary on the cannabis group which was melting down at the time.

Yesterday we learned that the Drug Enforcement Agency (DEA) has decided to hold an administrative law judge (ALJ) hearing on rescheduling cannabis. It is set for December 2.

The decision dashes all hopes of rescheduling before the election, sending cannabis stocks much lower.

Cannabis sector negativity and weakness persists, so the group continues to be a buy.


Now it is time to continue to average in at current prices, ahead of the next catalyst-induced move up.

Back on May 8, I suggested getting long cannabis as a contrarian trade because sentiment had turned dark, and there was a potential catalyst on the horizon.

Back on April 24 I suggested cannabis stocks looked like a buy in their weakened state. I singled out two ETFs for simplicity.

Cannabis stocks look attractive in the current weakness. While there will likely be more general market downside, a negative for cannabis since the group gets sold when sentiment shifts to “risk off,” two potential catalysts loom.

Cannabis stocks rallied hard Monday, particularly after the close when we learned that the Florida Supreme Court approved a referendum on legalizing the sale of cannabis for recreational use. Florida already permits medical use, but the change would expand the size of the Florida cannabis market significantly, especially considering Florida’s large tourist industry.