A month of strong outperformance shows that investors are starting to get bullish on cannabis stocks. Here are six reasons you should join them.
Cannabis stocks are up 14% in the past month, handily beating market gains of around 3.5%.
What’s going on?
The sector strength is a signal that the long-awaited federal rescheduling of cannabis may be on the horizon.
Now that the federal spending bill is out of the way and Middle East tensions have calmed down, the administration of President Donald Trump may be free to focus on other domestic policy issues.
With key midterm elections around the corner, Trump and the Republicans need domestic policy victories to win over younger voters. Polling consistently shows that voters, younger voters and voters in both parties want cannabis reform. Trump promised rescheduling during his election campaign, and he backs federal banking reform, overt moves to win over Democrats and young voters in swing states.
The background here is that moving cannabis to Schedule III from Schedule I under the Controlled Substances Act would help cannabis companies by neutralizing an IRS provision that bars them from deducting operating expenses.
5 Other Reasons to Be Bullish on Cannabis Stocks
Cannabis stocks have had a volatile ride in recent years, but the tide may be turning. While regulatory reform is the biggest long-term catalyst, there are several other positive trends that could breathe new life into the sector. Here are five compelling reasons to remain bullish on cannabis stocks today:
1. Technical Indicators Suggest a Bottom May Be in
Market technicians point to a possible double bottom formation in cannabis stocks. The AdvisorShares Pure U.S. Cannabis ETF (MSOS) hit lows of around $2.08 on both April 8 and June 23, indicating strong support. Since then, it has rebounded to around $3.08. If this pattern holds, it could mark the beginning of a sustained uptrend for U.S.-focused cannabis stocks.
2. DEA Leadership and Rescheduling Momentum
A major regulatory shift could be imminent. The appointment of Terrance Cole as DEA administrator—a position central to advancing cannabis rescheduling—could be the next big catalyst. Although the Department of Justice could move forward independently, Cole’s confirmation would provide the political push cannabis stocks need.
Momentum toward rescheduling cannabis from Schedule I to Schedule III would significantly ease banking, research, and taxation issues.
3. Public Support Is Reaching Unprecedented Levels
A new Pew Research Center poll found that 87% of Americans now support legalizing cannabis in some form. A majority of both Democrats (93%) and Republicans (81%) support either medical or recreational legalization. As public sentiment becomes overwhelmingly pro-cannabis, pressure on lawmakers and regulators increases—creating a favorable environment for cannabis policy reform and, in turn, cannabis stocks.
4. Political Voices Are Shifting
Alex Bruesewitz, a top advisor to Donald Trump’s Never Surrender PAC, recently slammed current federal cannabis policy as “illogical.” He emphasized Trump’s past support for reclassifying cannabis, calling it a “no-brainer.” This shift in rhetoric from a major conservative voice signals growing bipartisan backing for reform—great news for cannabis stocks awaiting federal change.
5. Athlete Advocacy Reflects Cultural Momentum
High-profile athletes like Mike Tyson and Kevin Durant have joined the push for cannabis reform, asking the White House to speed up action on clemency for non-violent offenders, rescheduling, and banking access. Their advocacy highlights how deeply cannabis acceptance has penetrated mainstream culture—fueling optimism for reform and boosting investor confidence in the cannabis sector.
Caution Flags to Watch
While the outlook is bright, investors should stay mindful of potential setbacks. Trump hasn’t always followed through on policy promises, and recent negative headlines—such as the Glass House Brands (GLASF) raid involving alleged underage labor—cast a shadow over industry credibility. Regulatory uncertainty remains a risk for cannabis stocks.