Trump’s Potential Cannabis Rescheduling Sparked Stock Rise and Industry Uncertainty

LOS ANGELES – On August 11, 2025, President Donald Trump’s public comments on potentially rescheduling Cannabis from Schedule I to Schedule III under the Controlled Substances Act skyrocketed Cannabis stocks. The AdvisorShares Pure U.S. Cannabis ETF (MSOS) jumped 28%, its best day since 2022, while the Amplify Alternative Harvest ETF (MJ) gained over 26%, marking a record single-day increase.

Major multistate operators (MSOs) also saw significant share price boosts, fueled by reports of Trump’s discussions with industry donors, according to the Wall Street Journal and CNN. However, the market’s enthusiasm is tempered by uncertainty as investors and analysts await concrete policy action, with Trump indicating a decision may come within weeks.

The market’s response reflects heightened investor optimism, driven by the prospect of reduced tax burdens and improved banking access for Cannabis businesses. However, the remarks have also sparked debate about the broader implications for the industry, particularly regarding the distinction between medical and recreational Cannabis markets.

According to a recent analysis by Viridian Capital Advisors, Trump’s comments have fueled significant trading volume and volatility in Cannabis equities. Rescheduling could alleviate the punitive tax restrictions under IRS Code Section 280E, which currently prevents Cannabis companies from deducting standard business expenses. This change could save MSOs, boosting cash flow and profitability. Viridian also highlights the potential for rescheduling to unlock banking services and attract institutional investment, fundamentally reshaping the financial outlook for the sector.

Despite the bullish market reaction, concerns persist about the regulatory fallout. Some industry observers worry that rescheduling could lead to stricter Food and Drug Administration (FDA) oversight, particularly if the agency prioritizes medical Cannabis over recreational markets. Such a shift could impose new compliance burdens on state-legal recreational programs, potentially favoring pharmaceutical companies over existing operators. Viridian, however, dismisses these fears, arguing that Trump’s political and business-oriented approach makes a crackdown on recreational Cannabis unlikely. The firm points out that the Cannabis industry supports 400,000 jobs and generates billions in state tax revenue, aligning with Trump’s pro-business stance and focus on economic growth.

Viridian further emphasizes Trump’s support for states’ rights, noting that the Cannabis industry’s growth has been driven by state-level legalization efforts in defiance of federal prohibition. Rescheduling could complement this framework by easing federal restrictions without dismantling state markets. Additionally, Viridian considers Cannabis reform as a strategic move for Trump to appeal to voters ahead of the 2026 midterms, given the strong public support for legalization, with polls showing over 60% of Americans favoring reform.

The analysis also addresses the debate over complete descheduling, which would allow interstate commerce and potentially disrupt markets in states with limited licensing structures. While descheduling could benefit major Cannabis-producing states like California and Oregon, it might lead to significant asset writedowns for MSOs in eastern states with restricted licenses. Viridian considers this scenario improbable in the near term, as it would face resistance from states reliant on Cannabis tax revenue.

From a financial perspective, the Cannabis sector remains a high-risk, high-reward opportunity. The recent stock surge underscores investor enthusiasm, but volatility persists due to regulatory uncertainty and the industry’s reliance on policy changes. Companies with strong balance sheets and diversified revenue streams, such as Trulieve Cannabis and Green Thumb Industries, are better positioned to navigate this environment, according to Viridian’s data. However, smaller operators and those with high debt levels face challenges, with Viridian ranking them lower in creditworthiness due to elevated leverage ratios.

As the industry awaits clarity on re(de)scheduling, the path forward hinges on administrative actions and political will. Trump’s openness to reform, coupled with his nomination of Robert F. Kennedy Jr. to lead the Department of Health and Human Services, signals potential progress, though opposition from figures like DEA Administrator Terrance Cole could complicate the process.

For now, the Cannabis sector stands at a critical juncture, balancing transformative opportunities against regulatory and market risks. While rescheduling could unlock significant economic potential, stakeholders should remain vigilant, adapting to a dynamic policy environment where outcomes remain uncertain.

Source: Viridian Capital Advisors