Trump's Cannabis Rescheduling Order Could Finally Kill A Crushing Tax Rule And Transform US Weed Stocks, Says Expert

Core Viewpoint - President Trump's executive order to reschedule cannabis to Schedule 3 is considered a significant shift in federal cannabis policy, potentially alleviating the burdensome tax regime on American cannabis operators [1]. Financial Implications - The executive order may lead to the elimination of Section 280E of the Internal Revenue Code, which currently taxes legal cannabis operators as if they were narcotics traffickers, preventing them from deducting any business expenses [2][3]. - Rescheduling cannabis to Schedule 3 would allow U.S. companies to deduct standard operating costs, significantly improving their financial health and cash flow profiles [3]. Market Reaction - The cannabis industry is responding positively to the news, especially after a strong performance in 2025, where the AdvisorShares MSOS ETF outperformed the S&P 500 [4]. Investment Volatility - Despite the positive developments, the cannabis sector remains highly volatile, with many institutional investors hesitant due to past political inaction. A market "pop" is anticipated upon finalization of the rescheduling, but this is viewed as just the initial step in a longer reform process [5]. Remaining Challenges - Even with the potential rescheduling, U.S. cannabis companies still face hurdles, such as the inability to list on major exchanges like NASDAQ or NYSE, which is available to Canadian companies. Additionally, the industry is still awaiting "safe harbor" provisions for banking [6].