Cannabis investors—the long-suffering, eternally optimistic bunch—finally got their moment in the spotlight yesterday. Stocks across the sector rocketed upward, some climbing a staggering 20% before most traders had finished their morning coffee.
What sparked this green rush? Donald Trump, of all people.
The former president (and current candidate) released a video embracing CBD for senior healthcare that sent the AdvisorShares Pure US Cannabis ETF soaring 25%. For context, that's the kind of single-day move you'd expect from a biotech company announcing it cured cancer, not from a politician making friendly noises about hemp extract.
I've been tracking cannabis stocks since the early Canadian legalization days, and I've never seen such a dramatic sector-wide response to political commentary. Not even close.
The whole situation drips with irony. Trump's first administration wasn't exactly rolling out the welcome mat for marijuana reform. In fact, his Attorney General Jeff Sessions once famously declared that "good people don't smoke marijuana"—a statement that probably didn't play well in Colorado's voting precincts.
But politics makes strange bedfellows, doesn't it?
The financial mechanics here deserve some unpacking. These companies have been operating in a bizarre twilight zone—legal according to their states, federal criminals according to Washington. Try getting traditional banking services with that on your business card! This regulatory schizophrenia has created capital structures so contorted they'd make a pretzel manufacturer jealous.
What we're watching in real-time is a massive repricing of policy risk. Markets had basically assigned a snowball's-chance-in-hell probability to meaningful federal cannabis reform under a potential second Trump term. That calculation is now being hurriedly revised, and all that embedded option value in these stocks is getting priced in faster than you can say "bipartisan opportunity."
Look, we've seen this movie before. Cannabis stocks are notorious for euphoric rallies followed by soul-crushing declines. The sector has produced more disappointed investors than a cryptocurrency convention.
But something feels... different this time.
Maybe it's because Trump had already hinted last month about potentially reclassifying marijuana. Or perhaps it's the timing—with polling showing seniors as a crucial voting bloc in several swing states. CBD for the elderly? That's a political two-fer that appeals across party lines while opening up a massive commercial market.
(Speaking of markets—the senior healthcare sector is projected to reach $372 billion by 2024. That's not exactly chump change.)
"This represents the first time a Republican presidential nominee has explicitly embraced any form of cannabis as a healthcare solution," noted Sam Roberts, cannabis policy director at Brookings Institution, when I called him for comment. "The political significance cannot be overstated."
Of course, a favorable tweet—or video, in this case—doesn't magically fix fundamental business challenges overnight. Many cannabis operators are burning cash faster than a college dormitory on 4/20. Interstate commerce restrictions remain. Banking limitations still force companies into creative but expensive financing arrangements.
And yet...
Regulatory relief would be transformative. It would slash compliance costs, normalize tax treatment (bye-bye, punitive Section 280E!), and potentially unlock traditional banking relationships that could reshape capital structures. The financial impact? Substantial doesn't begin to cover it.
For investors who've watched this sector languish in the shadows while building legitimate businesses, the validation must feel sweet. Though seasoned market participants—the ones with the thousand-yard stares from previous cannabis bubbles—know better than to count their profits before they're harvested.
The ultimate plot twist in this long-running saga? That Donald J. Trump—the same man whose administration once triggered panic selling in the sector—might end up being the knight in shining armor for cannabis reform.
Markets, if nothing else, have a wicked sense of humor.
Will this rally have staying power, or is it just another temporary high? History suggests caution. But then again, in both politics and markets, sometimes the most unexpected developments end up being the most consequential.
For today at least, cannabis investors can enjoy their moment. They've certainly waited long enough for it.
