Key Takeaways
The recent reclassification of marijuana is just the first step of many for the cannabis industry, with further catalysts this summer expected to create significant upside for pot stocks, according to Dan Ahrens of AdvisorShares.
"This is just the first step of many," Ahrens, who manages the AdvisorShares Pure US Cannabis ETF (MSOS), said in an interview on May 17. He pointed to a series of upcoming events that could fuel a rally in the sector, which has been buoyed by a landmark regulatory shift.
The core of the bullish outlook is the Department of Justice's decision, effective April 28, to move state-licensed medical marijuana from Schedule I to Schedule III of the Controlled Substances Act. This change eliminates the Internal Revenue Code Section 280E tax provision for medical operators, which previously disallowed standard business deductions and resulted in effective tax rates between 70% and 75%. With 280E relief, these companies could see their federal taxes fall closer to the 21% corporate rate.
The financial health of multi-state operators (MSOs) was already showing strength before the tax change. In the first quarter of 2026, Trulieve Cannabis reported $2 million in GAAP net income on $287 million in revenue, while Curaleaf Holdings posted a net profit of $70.1 million on revenue of $324.2 million. Green Thumb Industries also reported a profitable quarter with $15.4 million in net income from $300.2 million in revenue.
The next major event for the industry is a Drug Enforcement Administration (DEA) hearing scheduled to begin on June 29. The hearing will consider whether to reschedule all marijuana, including adult-use recreational products, to Schedule III. Such a move would grant the entire legal cannabis industry the same tax benefits now available only to medical-focused businesses.
"The most consequential change for cannabis investors is the removal of Internal Revenue Code Section 280E," said Boris Jordan, Chairman and CEO of Curaleaf, who called the rescheduling "historic."
While US operators see a clear path to improved profitability, Canadian licensed producers like Tilray Brands and Canopy Growth do not directly benefit from the 280E removal without US plant-touching operations. Meanwhile, momentum is also building at the state level, with Indiana State Senator Mike Bohacek announcing he is drafting legislation to legalize medical marijuana for the 2027 session, demonstrating the widening acceptance and market potential.
This article is for informational purposes only and does not constitute investment advice.
