Cannabis Stocks Up for Reversal: Pipedreams or Opportunity?

Key Points

• Trump's stance on cannabis has the market set up to complete a reversal. Here's why.
• Market support is tepid in 2025 but may expand rapidly due to relaxed regulations and greater access to capital.
• Catalysts in 2026 include expanding adult-use in critical markets.

News from the White House sent cannabis stocks up by robust double-digit figures in early December, setting them up for a complete market reversal. The news is that President Trump is contemplating an executive order to reclassify marijuana as a Schedule III substance.

While not sufficient to enable Federal legalization of adult-use, it is enough to unlock the cannabis investment market. The question is when the president will follow through on the move. 

What will rescheduling cannabis do? The primary benefit to cannabis companies is the decriminalization of their product. They will no longer be exempt from the tax credits enjoyed by other businesses, the banking sector will be more amenable to their business, and investment dollars will be unlocked.

As it is, many institutions are hesitant to invest in these companies due to their federally illegal status and inability to list on major exchanges. Decriminalizing will not only allow businesses to invest in research and discovery but also enable the uplisting of their stocks, opening the door to an influx of institutional and investment dollars that could overwhelm supply. 

Institutional and Market Support Is Improving, But Still Tepid

As it stands, the institutional support for the U.S.’s three largest multistate operators is tepid. The most tightly held is Trulieve, but its 20% institutional interest is still a meager amount. Analysts, on the other hand, who can reduce market volatility, are becoming more interested, with activity among the same three stocks revealing several upgrades in recent weeks.

The primary factor is the increased chance for policy change, however it may come. 

The risks for cannabis investment today include retail investors, who own the bulk of shares via OTC markets, ranging from 68% to 77%. This group is the most likely to buy or sell based on headlines, and they drive volatility. There is potential for cannabis stocks to pull back sharply in the upcoming weeks, and the potential will grow as the weeks progress.

Likewise, upside potential is limited due to overhang. Without a tangible catalyst, any upside is likely to be met by profit-takers (cannabis stocks have risen significantly from their lows) or long-term holders cutting their losses.

Curaleaf Is #1 in the U.S. Cannabis Market

Curaleaf OTCMKTS: CURLF is the #1 U.S. cannabis operator by size, revenue, and presence.

It operates stores in 23 states and Europe, generating approximately $1.5 billion in revenue from its retail and wholesale businesses. 

Advantages include a dominant presence, access to funding, and the generation of free cash flow.

Catalysts for 2026 include expanding international operations, new product launches, legalization of adult-use in key states, and an aggressive acquisition strategy. 

Trulieve: America’s 2nd Leading Cannabis Operator

Trulieve OTCMKTS: TCNNF is America’s second leading cannabis operator with stores and facilities in 11 states. It generates approximately $1.15 billion in annualized revenue and is a profitability leader.

A focus on vertical integration, dominance of the high-margin Florida market, and a strong retail presence see to that. Catalysts in 2026 include potential federal and local changes.

In Florida, where 70% of Trulieve stores are located, the state is on track for another adult-use vote, more likely to pass than the first.

The first vote passed by a majority of 56%, falling only 4 percentage points short of the required 60%. 

Green Thumb Industries: Healthy Balance Sheet Supports

Green Thumb Industries OTCMKTS: GTBIF is the U.S.'s third-largest cannabis operator. It has locations in 15 states, more than Trulieve, but fewer stores and a focus on smaller, underserved markets. The critical takeaway for it is its industry-leading balance sheet.

The cannabis industry has historically struggled with financing, liquidity, and cash flow; however, Green Thumb has consistently maintained strong cash flow, profitability, and financial health. 

Catalysts for 2026 include the potential for adult-use legalization in Virginia and Pennsylvania, as well as its share repurchase program.

The company’s cash flow-positive business allows it to reduce its share count and build leverage for its investors.