BETHESDA, Md. — The U.S. cannabis market is approaching historic regulatory reforms, which AdvisorShares is monitoring closely as an investment leader in this specialized sector. Managing over $1 billion in cannabis ETFs, AdvisorShares provides investors with direct exposure to U.S. multi-state operators (MSOs).
“As 2024 draws to a close, the cannabis industry stands at a pivotal moment, with evolving public perception and legislative and regulatory progress both in the U.S. and abroad,” said Dan Ahrens, managing director at AdvisorShares and portfolio manager of MSOS, MSOX and YOLO. “Cannabis continues to gain mainstream acceptance, and we believe elections and anticipated reforms are setting the stage for new avenues of growth and expanding opportunities for investors across the sector.”
Key Catalysts Pivoting into Year-End
Federal Cannabis Rescheduling
Current Status: Cannabis is in the process of being reclassified from a Schedule I substance, which is the most highly controlled level for substances with no accepted medical use and a high potential for abuse, to Schedule III, which recognizes medical value and lower potential for dependence.
Impact: This reclassification holds substantial benefits for U.S. cannabis companies, particularly multi-state operators (MSOs). One of the most significant advantages would be the removal of tax burdens enforced under IRS Code Section 280E, allowing companies to retain more capital on their balance sheets.
Public Support: As part of the rescheduling process, the DEA held a public comment period where 92.45% of comments of the record-breaking 43,000 comments submitted favor the change for rescheduling according to Headset analysis.
Cannabis on the Ballot – Billions at Stake
Current Status: A growing number of states continue to adopt medical or adult-use cannabis programs. As of now, a significant portion of the U.S. population resides in states with such programs, and this number is expected to increase following the upcoming November 5th ballot initiatives. These initiatives include potential milestones for several states, further driving momentum in the cannabis market.
States with Key Ballot Initiatives
North Dakota and Nebraska: Voters will decide on Initiated Measure 5, which seeks to legalize recreational marijuana. The state already allows medical marijuana use. Nebraska is one of the few states still waiting on medical cannabis access. In November, voters will weigh in on Initiative 437, which would legalize medical marijuana.
Florida: Florida’s cannabis market is on the brink of significant expansion, with a vote scheduled for November 2024 to legalize adult-use marijuana. Currently, Florida has over 871,000 registered medical marijuana patients and generates $2 billion in annual sales. Projections indicate that adult-use legalization could propel the market to between $4.9 billion and $6.1 billion in sales within the first year of implementation*. Former President Donald Trump has publicly voiced support for the measure, signaling widespread political and public backing.
These legislative and regulatory changes are anticipated to accelerate growth in the cannabis sector and expand market opportunities. The industry’s trajectory points towards a promising future as normalization and reform continue to unfold at both the state and federal levels.
For the first time, both major presidential candidates have publicly expressed support for cannabis reform, marking a significant shift in the national conversation on marijuana policy.
Pot Becomes a Popular Political Issue
For the first time, both major presidential candidates have publicly expressed support for cannabis reform, marking a significant shift in the national conversation on marijuana policy.
AdvisorShares remains optimistic about the potential for significant progress toward cannabis reform and believe we are on the path to achieving historic changes. While we acknowledge these reforms are long overdue, we are mindful that delays and extended timelines may still arise in the process of implementation.
About AdvisorShares
AdvisorShares is a leading provider of active ETFs. AdvisorShares oversees a portfolio of publicly traded cannabis stocks through its three NYSE-listed ETFs.
