Cannabis Stocks Decline as Federal Reform Stalls in U.S

LOS ANGELES- U.S. cannabis stocks have declined sharply as investor enthusiasm dampens amid continued delays in federal reform. The AdvisorShares Pure US Cannabis ETF dropped around 48% in 2024, with company shares like Curaleaf, Verano, and Green Thumb falling between 31% and 73%.

The market’s downturn is rooted in persistent regulatory obstacles: Congress has not advanced significant reforms, and a DEA review of rescheduling cannabis under the Controlled Substances Act is now expected to extend into 2026. Without federal clarity—on rescheduling, banking access, and harmonized regulation—investors remain cautious.

State-level developments offer limited offset. While New York was projected to surpass $1 billion in cannabis sales in 2025, smaller jurisdictions struggle to adopt adult-use frameworks, and prior referendums in Florida, North Dakota, and South Dakota were defeated. Pending state rollouts in Ohio, Pennsylvania, and Kentucky present potential but have yet to significantly alter market sentiment.

Despite the downturn, analysts see some positive signs. Increasing consolidation via mergers and acquisitions may lead to stronger operators emerging, and evolving models such as consumption lounges and hemp-derived THC products are expanding market opportunities. Nevertheless, sector recovery remains constrained by federal inaction, and sobriety has replaced the earlier “gold‑rush” optimism.

Key Takeaways:

• Market downturn: Cannabis equities posted steep losses across U.S. and Canadian-listed firms in 2024.

• Federal gridlock: No decisive action on rescheduling or banking reform; DEA review stalled into 2026.

• State-level variance: Growth concentrated in mature markets like New York, while broader legalization efforts falter.

• Strategic shift: M&A activity and diversified business models offer stability pathways amid challenging sentiment .

As 2025 progresses, investors are focused on legislative signals—especially any movement on rescheduling or banking reform—and on which companies can adapt through scale or diversification. Until federal policy changes materialize, market volatility is likely to persist.