After a rough year of big drops in the prices of stocks related to the business of approved marijuana in the U.S., investors in cannabis stocks will surely be hoping for a better year in 2025.
It’s almost the end of 2024, and the AdvisorShares Pure US Cannabis ETF MSOS -3.29% is down 48% for the year.
Curaleaf Holdings (CURLF -2.56%) has lost about 62% of its value this year, Verano Holdings (VRNOF -1.64%) has lost about 73%, Trulieve (TCNNF -1.36%) has lost about 7.5%, Green Thumb Industries (GTBIF +0.78%) has lost 31%, and Cresco Labs (CRLBF +0.18%) has lost about 37% of its value.
In 2024, Ascend Wellness AAWH has dropped 64% and TerrAscend TSNDF has dropped 7.94%.
Canopy Growth (CGC) has dropped 45% and Tilray Brands (TLRY) has dropped about 37%. It was Canada’s OrganiGram OGI +3.56% that didn’t follow the trend. Its stock price has gone up more than 20% this year.
Because things are so bad, one weed company, Weedmaps MAPS -2.01%, wants to go private.
The sector is facing problems at both the state and federal levels in the U.S., which is why the stock prices dropped.
The new Congress, which will be run by Republicans, doesn’t seem to have cannabis reform at the top of its list of priorities in the short term.
One lawyer who works with marijuana told BourseWatch that the U.S. Drug Enforcement Administration may not review the change of cannabis’s rating to a less dangerous level until at least 2026.
Trump, the next president, spoke out in support of a Florida poll that would have legalized cannabis for adults, but it didn’t get the 60% vote it needed to pass.
The same kinds of efforts failed in both South Dakota and North Dakota, but in Nebraska, a medical program was approved.
The cannabis industry has often looked to grow state-by-state. However, after Nebraska, no other big states are likely to start new medical or recreational pot programs.
Pennsylvania is still in the dark. Even though Gov. Josh Shapiro supports adult use of cannabis, it would need to be approved by both houses of the state government before it could happen. In the past, that’s been hard to do.
For now, adult-use cannabis in Florida is off the table because Proposition 3 failed. This was a ballot that would have let marijuana be sold in stores in the Sunshine State, and Trump said he was going to vote for it.
Hawaii and New Hampshire lawmakers have been working on bills to let adults use cannabis, but the results are still unknown.
Many other large states, like Texas, don’t seem likely to move in that direction either. In 2023, Oklahoma voters turned down a program to allow adults to use weed.
As of last check, 38 of the 50 U.S. states have some kind of medical marijuana program, and 24 back adult-use programs. In 2025, the GOP will control the White House, the U.S. House of Representatives, and the Senate.
Charles Gormally, a cannabis lawyer at Brach Eichler LLP, said that most Republicans in Congress from the middle of the country are not very optimistic about cannabis change.
He said, “They don’t accept it.” “That’s the main message from Republicans: stop drug policies from getting even more lax.”
It’s not likely that the SAFER Banking bill to let legal cannabis companies use the banking system will become law if House Speaker Mike Johnson and Senate Majority Leader John Thune keep doing what they’re doing. In the last ten years, the bill has passed seven times in the U.S. House of Representatives, but it has never made it to a full Senate vote.
On the plus side, Gormally said, Trump might include pot in his plan to loosen rules and let the states decide what happens because it would be “good for business.”
Some people who know a lot about weed said that Trump’s choice of Robert F. Kennedy Jr. as secretary of Health and Human Services could help ease restrictions on the drug or even get it taken off the Controlled Substances Act completely.
In any case, it’s still not clear what will happen with cannabis in 2025, and big changes to the law may not happen at the federal level.
Since Gormally is a lawyer who follows federal law when it comes to marijuana reform, he said that earlier predictions that the DEA would re-schedule cannabis in 2024 were too optimistic.
He said that the process could last for another year or more because the people could have problems with it and there could be lawsuits over it.
Cannabis businesses don’t have many choices for new states, but they keep growing in places they already do business.
As an example, New York State is set to hit $1 billion in sales this year as authorities crack down on illegal pot shops and give licenses to new stores to open.
Lauren Fontein, co-founder and compliance chief at The Artist Tree, said that the number of stores in more established markets like California may go down in 2025 because of lower average order values, ongoing illegal operators, and higher taxes.
Fontein said in a prepared statement, “We’ll likely see more companies going into receivership, as we’ve seen all through 2024. This will give the legal market a chance to correct itself from the oversupply of retail outlets that exists in many California cities right now.” “I also hope that communities that have been cautious about cannabis will slowly move toward allowing retail locations as more older and middle-aged people use cannabis for health reasons and as a socially acceptable alternative to alcohol.”
Mike Khemmoro, operating chief at Mango Cannabis, said that the industry might grow slowly through small changes like possible drinking lounges in Michigan and New Mexico, but that mergers will be the main way to get bigger.
In an email to MarketWatch, Khemmor said, “The gold rush is over.” “Companies that can’t grow or stay profitable will be bought out or shut down.”
