It wasn’t that long ago that cannabis stocks promised explosive growth after Canada legalized recreational marijuana in 2018 and U.S. states accelerated reforms. Investors poured billions into the sector, envisioning a booming green economy.
Today, 40 states allow medical marijuana, while 24 permit recreational use, covering nearly 55% to 60% of Americans. Yet, the hype faded fast. Pot stocks like Canopy Growth (NASDAQ:CGC), Tilray Brands (NASDAQ:TLRY), Aurora Cannabis (NASDAQ:ACB), and Cronos Group (NASDAQ:CRON) once hit multi-billion-dollar valuations — CGC topped $10 billion, TLRY nearly $20 billion.
Oversupply, regulatory delays, and fierce competition crushed those dreams. Now, they trade as shadows of their former selves, often dipping into or near penny-stock territory: CGC at $1.34 per share; TLRY at $1.15 per share; ACB, $4.86, and CRON, $2.63.
This morning, though, pre-market trading tells a different story. Cannabis shares are surging on fresh optimism, with CRON up 13%, ACB climbing 14%, and CGC and TLRY rocketing over 20% each. Here’s why marijuana stocks are sparking up.
Trump’s Win Ignited Federal Reform Dreams
President Trump’s 2024 election victory sparked immediate buzz in the cannabis world. Supporters hoped his administration would finally tackle federal barriers, either through full legalization or rescheduling marijuana from Schedule I to Schedule III. Such a shift could unlock massive gains for pot stocks.
Right now, with pot still illegal federally, cannabis companies are blocked from accessing traditional banking, forcing many operators into cash-only mode. Despite state laws, banks fear penalties under the Bank Secrecy Act, leaving retail outlets such as dispensaries without basic checking accounts.
They haul in millions of dollars in cash, heightening robbery risks — industry theft is an increasingly common occurrence, often through “crash-and-grab” robberies — and complicating tax compliance. Rescheduling would ease these woes, letting firms secure loans, credit lines, and insurance. It could also slash tax rates under IRS Section 280E, which denies deductions for “trafficking” businesses.
For stocks like CGC and TLRY, with global footprints, this means easier expansion into U.S. markets, potentially doubling revenues as interstate commerce opens.
This Is What Lit the Fuse
Last night, Trump amplified the momentum with a Truth Social post sharing a video from The Commonwealth Project, a Massachusetts group pushing medical cannabis for seniors. The nearly three-minute clip dives into cannabis benefits for age-related issues like pain, arthritis, Alzheimer’s symptoms, and cancer side effects. It spotlights the endocannabinoid system — our body’s natural regulator of mood, sleep, and inflammation — and urges doctors to learn about it.
The video calls for full Medicare coverage of CBD, labeling it the “most important senior health initiative of the century.” It notes 20% of those 65 and older already use CBD, outpacing other age groups. A Forbes Health survey last year found an astounding 90% of those 77 or older used CBD. Trump’s post, timed amid White House rescheduling talks, feels like a direct nod to reform. It’s clear why marijuana stocks are surging: Investors see this as pro-cannabis signaling from the top, fueling bets on faster policy wins.
This marks Trump’s strongest cannabis nod yet, building on his past support for state rights and recent rescheduling hints. It spotlights medical uses, where demand is strong — U.S. medical sales hit $10 billion in 2024. Stocks with heavy medical exposure stand to gain most.
Aurora leads here, with 66% of revenue from medical channels, while Tilray and Canopy Growth leach derive around 35% or so, including EU exports (which is primarily medical use) and U.S. CBD. Cronos has a more recreational tilt to its sales.
Key Takeaway
Are pot stocks a buy now? It’s tempting at these stock prices, with reform tailwinds building. A Schedule III move could boost multiples 2x to 3x via tax savings and banking. But temper your enthusiasm: Rescheduling needs Drug Enforcement Administration (DEA) finalization, possible court fights, and congressional buy-in — likely months away, not weeks.
Trump’s team is prioritizing the economy and the border first. His Truth Social post is a nice injection of adrenaline, but volatility for pot stocks will remain high. There is still black-market competition to contend with, too. In Canada, illicit marijuana is often cheaper than the legal stuff because of regulatory costs.
For long-term believers, consider buying on dips in cannabis stock prices, but keep your allocation limited. Cannabis investors have been down this path before — and been disappointed. This, however, could be the best shot at changing the playing field yet.
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