The U.S. cannabis industry has experienced unprecedented volatility and opportunity in 2025, driven primarily by speculation that the Trump administration would move to reschedule marijuana from Schedule I to Schedule III under the Controlled Substances Act. The potential regulatory shift has sent cannabis stocks soaring and created new optimism for multi-state operators, or MSOs.
The most significant benefit of rescheduling would be the elimination of Section 280E of the Internal Revenue Code, which currently prevents cannabis companies from deducting ordinary business expenses. Additional benefits of rescheduling include improved access to banking services, enhanced investment appeal from institutions that have avoided Schedule I substances, and the potential for interstate commerce as federal restrictions ease. While rescheduling wouldn’t fully legalize cannabis, it would reduce regulatory risk and create a pathway for broader reform.
Under current law, cannabis companies can only deduct the cost of goods sold, meaning they cannot write off rent, payroll, marketing, or administrative expenses. This arcane tax provision creates effective tax rates of 60-70% for many cannabis operations, compared to the standard 21% corporate rate. If cannabis moves to Schedule III, these businesses would gain access to normal tax deductions, fundamentally improving their cash flow and profitability.
Let’s take a look at some of the MSOs currently operating and expanding in the United States.
Verano Holdings (VRNOF)
Verano has emerged as one of the most geographically diversified MSOs, operating in 13 states with a vertically integrated model spanning cultivation, processing, and retail. Despite revenue pressures from industry-wide price compression, the company has shown impressive operational discipline.
Watch Verano CIO Aaron Miles discuss the industry and Verano’s place in it in a wide ranging interview.
Trulieve Cannabis (TCNNF)
As Florida’s dominant cannabis operator, Trulieve commands over 50% market share in the state and has been expanding nationally through strategic acquisitions. The company has consistently generated positive cash flow and maintains one of the industry’s strongest balance sheets. CEO Kim Rivers was notably present at Trump’s New Jersey fundraiser, where cannabis rescheduling was reportedly discussed.
LEEF Brands (LEEEF)
LEEF represents a unique investment opportunity as both a California-based extraction specialist and emerging New York MSO. LEEF’s massive Salisbury Canyon Ranch in California—with 65 acres currently in production and plans for 187 acres by 2027—positions it as one of the largest outdoor cultivation operations globally. The company anticipates vertical integration will add approximately 19% to gross margins.
Watch Leef Brands CEO Micah Anderson talk about the upcoming second harvest on the company’s Salisbury Canyon Ranch.
Cresco Labs (CRLBF)
Cresco has undergone significant strategic restructuring, including the divestiture of its challenging California operations while retaining its premium FloraCal brand. The company currently operates 73 retail locations in 6 states under the Sunnyside umbrella. Cresco also wholesales several product lines in major markets across the country, leveraging its 13 production facilities and brand recognition.
Green Thumb Industries (GTBIF)
GTI stands out among MSOs for its consistent profitability and strong cash generation. The company operates in 15 markets with a balanced approach between wholesale and retail operations. Recent quarters have shown impressive financial metrics, including 240% year-over-year growth in net income and a healthy cash balance of $224 million.
AdvisorShares Pure US Cannabis ETF (MSOS)
For investors seeking diversified exposure to the U.S. cannabis sector, MSOS offers a professionally managed approach to this volatile but potentially rewarding space. MSOS focuses exclusively on U.S. cannabis companies, differentiating it from broader cannabis ETFs that include Canadian licensed producers. MSOS provides exposure to the largest MSOs while maintaining the liquidity that many individual cannabis stocks lack. Recent months have seen trading volumes surge 128%, reflecting renewed institutional and retail interest in cannabis investments.
In Summary
For investors, the current environment presents both opportunity and risk. Cannabis stocks have historically been highly volatile and subject to boom and bust cycles driven more by policy speculation than fundamental performance. However, the combination of potential 280E relief, improved banking access, and enhanced institutional investment could create a more stable foundation for long-term growth.
