Trump's Marijuana Rescheduling Plan: A Catalyst for Cannabis Sector Growth

The potential reclassification of marijuana from a Schedule I to a Schedule III controlled substance under the Trump administration represents a seismic shift in U.S. drug policy-a move that could unlock unprecedented growth for the cannabis industry. With reports indicating that President Donald Trump is poised to issue an executive order to ease federal restrictions, investors are recalibrating their strategies to capitalize on the regulatory and financial tailwinds. This analysis explores the implications of the rescheduling plan, identifies key cannabis producers and ETFs positioned to benefit, and evaluates the broader market dynamics at play.

Regulatory Overhaul: A New Era for Cannabis

The reclassification of marijuana to Schedule III would align it with substances like anabolic steroids and certain prescription painkillers, significantly reducing federal oversight. According to a report by , this shift would eliminate the onerous IRS Section 280E tax rule, which currently prohibits cannabis businesses from deducting ordinary business expenses. Additionally, research indicates it could pave the way for Medicare coverage of specific CBD treatments and facilitate access to traditional banking services for state-legal operators.

While the move does not legalize cannabis at the federal level, it would remove critical barriers to industry expansion. For instance, pharmaceutical companies could seek FDA approval for cannabis-based therapies, and state-sanctioned businesses could access capital markets more easily. However, challenges remain, including state-level enforcement complexities and lingering federal research restrictions.

Market Reaction: Stocks and ETFs Surge on Optimism

The prospect of rescheduling has already ignited investor enthusiasm. Cannabis stocks surged over 20% in early December 2025, with companies like Tilray Brands (TLRY) and Canopy Growth (CGC) leading the charge. ETFs such as the Amplify Seymour Cannabis ETF (CNBS) saw a 35% jump in value following the news, outperforming the S&P 500 by a wide margin.

The Roundhill Cannabis ETF (WEED), which holds concentrated stakes in multistate operators like Curaleaf and Trulieve Cannabis, is another standout performer. As of Q3 2025, WEED's top holdings include Curaleaf (34.25%), Green Thumb Industries (28.11%), and Trulieve (23.69%), reflecting its focus on large-cap, cash-generating operators.

Key Producers: Financial Strength and Strategic Positioning

Trulieve Cannabis Corp. (TCNNF): Trulieve's Q3 2025 results underscore its operational discipline and financial resilience. The company reported $288 million in revenue, with 94% derived from retail sales and a 59% gross margin. Adjusted EBITDA of $103 million and free cash flow of $64 million highlight its ability to generate liquidity in a competitive market. With 232 retail dispensaries and over four million square feet of cultivation capacity, Trulieve is well-positioned to scale as federal restrictions ease.

Tilray Brands (TLRY): Tilray's Q3 revenue of $186 million reflects a strategic pivot toward profitability, with gross margins expanding by 800 basis points in Canada. The company's U.S. expansion into hemp-derived THC beverages and its adoption of AI-driven operations further strengthen its long-term outlook.

Canopy Growth (CGC): Despite a 5% year-over-year revenue decline, Canopy's medical cannabis segment grew 16%, and its Storz & Bickel division saw a 19% revenue increase. The launch of the Claybourne brand in Canada, which secured third-place market share in key provinces, demonstrates the company's ability to innovate and capture market share.

ETFs: Diversified Exposure to a Transforming Sector

For investors seeking broad exposure, cannabis ETFs offer a compelling alternative. The AdvisorShares Pure US Cannabis ETF (MSOS) and the Amplify Alternative Harvest ETF (MJ) have historically outperformed the S&P 500, with year-to-date returns averaging 43%. These funds provide access to a diversified basket of producers, cultivators, and ancillary businesses, mitigating the risks associated with individual stock picks.

Challenges and Considerations

While the rescheduling plan presents significant opportunities, investors must remain mindful of lingering risks. State-level enforcement disparities could create regulatory fragmentation, and federal research restrictions may delay the development of cannabis-based pharmaceuticals. Additionally, the insurance sector faces a potential boom as cannabis businesses transition from cash-heavy operations to traditional financial models.

Conclusion: A Strategic Inflection Point

Trump's marijuana rescheduling plan marks a pivotal moment for the cannabis industry. By reducing federal restrictions and unlocking access to capital, the move could catalyze a wave of innovation and growth. Investors with a long-term horizon should consider allocating to high-margin producers like Trulieve and Tilray, as well as ETFs that offer diversified exposure. However, due diligence remains critical, as the sector's evolution will depend on both regulatory clarity and market execution.