How to play cannabis stocks now: An investor's playbook

Core Viewpoint - Cannabis stocks have experienced significant growth recently, driven by favorable developments in Washington, including President Trump's endorsement of CBD for seniors and discussions about reclassifying marijuana as a schedule 3 drug [1][4]. Industry Overview - Cannabis stocks have doubled in value over the past three months amid hopes for federal reform, although past experiences have made investors cautious about the sustainability of this growth [2][6]. - The cannabis industry has faced challenges over the last five years, particularly due to unfulfilled promises of reform from politicians [3][6]. Regulatory Environment - Currently classified as a schedule one drug, there are discussions about rescheduling cannabis to schedule three, which would involve coordination between the Department of Health and Human Services (HHS) and the Drug Enforcement Administration (DEA) [4][5]. - An executive order from President Trump could initiate this rescheduling process, but congressional support and involvement from the Department of Justice (DOJ) would still be necessary [5]. Investment Landscape - There is a notable disconnect in the U.S. cannabis investment landscape, where Canadian companies can list on major U.S. exchanges despite restrictions on THC cannabis operations in the U.S. [7][8]. - U.S. multi-state operators, which conduct significant business in states with medical cannabis dispensaries, face challenges due to federal law, including limitations on banking and exchange listings [9][10]. Market Dynamics - The largest cannabis fund in the world focuses on U.S. multi-state operators and is listed on the New York Stock Exchange, providing investors with access to these companies [10]. - Rescheduling cannabis could trigger a domino effect, allowing these companies to access banking services and institutional investments, potentially reversing losses from the past five years [11]. Company Highlights - Top investment picks include Cural Leaf, True Leave, Cresco Labs, and Verono, which are positioned well for potential reform and operate in multiple states [12][13].