The One IRS Rule Keeping Cannabis Stocks Down Despite Record Cash Flow

By David Beren Published Mar 12, 10:16AM EDT

Quick Read

Trulieve (TCNNF) generated $228.6M in free cash flow during 2025 on $1.18B in revenue but carries $668M in uncertain 280E tax liabilities that would be eliminated by rescheduling. Green Thumb Industries (GTBIF) CEO Ben Kovler stated the stock price serves as a barometer for federal action. Curaleaf (CURLF) and Verano (VRNOF) are navigating debt refinancing and price compression while awaiting 280E relief.
Retail options traders are betting heavily on cannabis rescheduling from Schedule I to Schedule III, which would eliminate Section 280E tax restrictions and unlock significant earnings relief for multi-state operators like Trulieve, Green Thumb, and Curaleaf.

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The One IRS Rule Keeping Cannabis Stocks Down Despite Record Cash Flow — © rgbspace / Getty Images

Retail investors in r/options are making an unusual bet on AdvisorShares Pure US Cannabis ETF (NYSEARCA:MSOS), and the activity is hard to ignore. The post reflects the speculative tone common in options-focused communities, with user IrishGoodbyeee on March 10 writing about an extremely low put-call ratio for the 3/20 expiration, with a PCR below 0.01 that had held for more than five trading sessions alongside heavy open interest that drops off sharply after that date. The MSOS composite sentiment score sits at 72 out of 100, leaning bullish, even as the ETF has slid 18% year-to-date. The driver: federal cannabis rescheduling.

An infographic titled 'Cannabis Rescheduling Sentiment'. Section 1, 'The Investment', shows a cannabis leaf with an upward green arrow, and text: 'AdvisorShares Pure US Cannabis ETF (MSOS)', 'Tracking US cannabis operators.' Section 2, 'Social Sentiment Score', displays the number '88 /100' in large green font, followed by 'Very Bullish' and a gauge with a needle pointing strongly into the green, bullish area. The source is noted as '(Source: Reddit Aggregation)'. Section 3, 'What is Driving That Score Today?', shows a wooden gavel next to a document with an arrow indicating a change from 'SCHEDULE I' to 'SCHEDULE III'. The accompanying text reads: 'Federal Cannabis Rescheduling (Schedule I to III)', 'Anticipation of 280E Tax Relief', and 'Key catalyst for sector.' — This infographic highlights the highly bullish social sentiment for the AdvisorShares Pure US Cannabis ETF (MSOS), driven by the anticipation of federal cannabis rescheduling from Schedule I to III.

MSOS extremely low PCR for 3/20 expiration
by u/IrishGoodbyeee in r/options

President Trump signed an executive order in December 2025 directing the DOJ to complete rulemaking to move marijuana from Schedule I to Schedule III “expeditiously.” That order does not reschedule cannabis on its own, and the DEA administrator has publicly opposed legalization. Prediction market traders on Polymarket put the odds of rescheduling by March 31 at under 3%, but by June 30 at 30.5% and roughly even odds by year-end.

Why 280E Is the Only Question That Matters

Rescheduling to Schedule III would automatically eliminate Section 280E, the IRS provision barring cannabis companies from deducting ordinary business expenses. For multi-state operators, this is the difference between taxable income on gross profit versus actual earnings. The operators inside MSOS are carrying that weight now:

Trulieve (OTC:TCNNF) reported a record $228.6M in full-year free cash flow in 2025 but still carries $668M in uncertain 280E tax liabilities
Green Thumb Industries (OTC:GTBIF) CEO Ben Kovler said, “our stock price continues to serve as a barometer for federal action”
Curaleaf (OTC:CURLF) and Verano (OTC:VRNOF) are both navigating debt refinancing and price compression with no 280E relief in sight

What Rescheduling Could Unlock for Trulieve

The post reflects the speculative tone common in options-focused communities: “Are institutions making huge bets that the rescheduling happens next week? Please poke holes in this idea if anyone can explain this unusual activity? I’m ready to go all in tomorrow.” It drew 26 comments and scored 24 upvotes. The sentiment reading from this activity is 88 out of 100, classified as very bullish. The activity reflects high conviction among a small number of participants ahead of a potential policy decision. One user’s personal sentiment was captured in the comment, “I’m ready to go all in tomorrow” – a view representative of the speculative enthusiasm in the thread, not a recommendation.

Trulieve offers the clearest picture of what 280E relief could mean, given that the company generated $228.6M in free cash flow in 2025 on $1.18B in full-year revenue, while carrying more debt-related uncertainty from 280E than its entire cash balance of $255.5M. CEO Kim Rivers noted, “With rescheduling on the horizon, Trulieve is carrying the momentum into 2026.” The stock is still down 26% year-to-date despite that operational strength, reflecting how much valuation is tied to federal policy rather than business execution. Analysts and investors have noted that 280E relief would significantly alter the financial profile of every operator in the sector.

About the Author David Beren →

David Beren has been a Flywheel Publishing contributor since 2022. Writing for 24/7 Wall St. since 2023, David loves to write about topics of all shapes and sizes. As a technology expert, David focuses heavily on consumer electronics brands, automobiles, and general technology. He has previously written for LifeWire, formerly About.com. As a part-time freelance writer, David’s “day job” has been working on and leading social media for multiple Fortune 100 brands. David loves the flexibility of this field and its ability to reach customers exactly where they like to spend their time. Additionally, David previously published his own blog, TmoNews.com, which reached 3 million readers in its first year. In addition to freelance and social media work, David loves to spend time with his family and children and relive the glory days of video game consoles by playing any retro game console he can get his hands on.