Donald Trump has expressed support for cannabis reform, including backing recreational use in Florida’s upcoming ballot, yet marijuana stocks remain sluggish.
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Despite growing expectations for a cannabis boom following state-level legalization beginning in 2012, the industry has struggled to sustain momentum.
In 2024, Americans spent approximately $29 billion on legal marijuana, but projections of rapid expansion have fallen flat. President Joe Biden’s unfulfilled promise to decriminalize cannabis and stalled state-level reforms—such as ballot failures in Florida and the Dakotas—have dampened optimism.
Legal marijuana businesses also face stiff competition from illicit markets, which are estimated to be twice as large and operate free from taxes and regulations. Additionally, legal hemp-derived products offer a cheaper alternative, contributing to record-low wholesale prices for cannabis.
As a result, the industry’s performance has been bleak. Revenue growth slowed to less than 1% in 2024, while profits plummeted. The American Cannabis Operator Index, which tracks market values in the sector, has dropped over 90% since early 2021.
Investors remain doubtful that Trump will prioritize sweeping cannabis reform, especially after Matt Gaetz—an advocate for federal legalization—was withdrawn as Trump’s attorney-general nominee amid misconduct allegations, which he denies.
However, some hope lies in potential tax reforms. Cannabis’s classification as a “schedule-1 substance” prevents businesses from deducting standard expenses, leading to high tax burdens. Recent hearings by the Drug Enforcement Administration to reconsider this classification could ease tax pressures if changes are finalized by March.
While these adjustments may improve profitability for marijuana companies, broader reforms under Trump’s administration remain uncertain, leaving investors hesitant.
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