Cannabis stocks may be on the brink of a comeback after years of little movement, driven by investor hope for new federal rules on hemp-derived products and signs that President Donald Trump could take a more permissive approach to marijuana. Publicly traded cannabis companies have experienced mixed results. Verano Holdings on Wednesday reported $203 million in revenue — a small increase from the prior quarter but down 6% year-over-year — and a $44 million net loss that included a $5 million impairment on a Pennsylvania facility and $10 million in legal contingencies tied to a settlement. Curaleaf and Trulieve are scheduled to report earnings next week. While cannabis-focused ETFs are down roughly 10% this year, some executives remain upbeat. Tilray Brands’ CEO Irwin Simon said the industry could be at an “inflection point,” noting Tilray’s stock jumped 22% in October after better-than-expected fiscal first-quarter results. “If reforms move forward, it could attract more companies to do business in the U.S.,” Simon told CNBC.

Three developments are fueling the optimism: Trump’s apparent support for Medicare coverage of CBD (a non-intoxicating hemp compound), his comments about reclassifying marijuana’s drug status, and congressional moves to regulate hemp. Cannabis use is also rising. A 2024 report analyzing 40 years of data from Carnegie Mellon University found daily or near-daily marijuana use has surpassed daily drinking in the U.S. The Department of Agriculture says the annual value of U.S. cannabis production grew 40% last year. And Grand View Research projects cannabis-derived products, including CBD and marijuana-based items, could become a $160 billion global market by 2032.

The so-called “Trump effect” kicked in when the president shared a video on Truth Social in September promoting Medicare coverage for CBD and making unproven anti-aging claims. The video, produced by The Commonwealth Project — an advocacy group for seniors using cannabis founded and funded by billionaire Howard Kessler — directly appealed to Trump. Kessler, who moved into cannabis advocacy after a career in affinity credit cards, has been in Trump’s orbit for years. Neither Kessler nor the White House responded to requests for comment. Markets reacted quickly: on the day the video was posted, Tilray shares jumped 42%, Aurora Cannabis gained 25%, Canopy Growth rose 18%, and Cronos Group added 15.5%. “A lot of folks in the industry saw him posting the video as a bit of a surprise but we think he’s trying to gauge how the public feels about cannabis products,” said Adam Smith, executive director of the Marijuana Policy Project. Critics urged caution. Kevin Sabet of Smart Approaches to Marijuana said it’s premature to view the posts as a full endorsement of reform, noting social posts don’t always reflect formal policy. And experts point out limited evidence on effective CBD doses for inflammation or chronic pain, especially in seniors; to date the FDA has approved only one CBD-based drug, Epidiolex. “Other uses lack scientific evidence and have largely unknown effects,” said Meg Haney, director of the Cannabis Research Laboratory at Columbia University.

Discussion about CBD ties into a broader push to update the 2018 Farm Bill, which legalized hemp (the low-THC variant of the marijuana plant). Congress is considering updates by year’s end that could set federal standards for labeling, testing and safety for hemp-derived products that the original law left unregulated. “Regulation isn’t scary, as long as it is effective, because the clearer the lines are, the better it is to be in the business [when] you don’t have a looming axe over your head,” said Pamela Epstein, chief legal and regulatory officer at hemp producer Terpene Belt Farms. The 2018 law helped create a market the data firm Grand View Research valued at $1.6 billion by 2023. Hemp-derived CBD products with under 0.3% THC spread into gummies, drinks, creams and pet treats, and are projected to drive more than 20% growth by 2030. But without federal oversight, some consumers encountered mislabeled, untested and unsafe products. “It’s possible the hemp sector grew a little too fast without rules,” Smith said, citing high-THC products marketed as CBD, items aimed at children, and tainted samples. Congressional proposals range from outright bans to tighter THC limits; some in the industry want an “alcohol-model” framework with the FDA overseeing safety and the Alcohol and Tobacco Tax and Trade Bureau handling taxation and distribution. “Clear rules aren’t scary,” Simon said. “They’re the best way to grow sustainably and shed the uncertainty that’s defined this space for years.” Industry groups warn that a ban could cripple an economy that supports roughly 320,000 jobs, according to the U.S. Hemp Roundtable. Michael Mayes, CEO of consulting firm Quantum 9, argued federal standards are essential to legitimize the market and attract institutional investors. “Smart, consistent rules could be the key to unlocking billions in growth while working to ensure consumer safety,” Mayes told CNBC.

Trump’s apparent openness to CBD has also prompted speculation he might go further. In August he said his administration was “looking at” reclassifying marijuana from a Schedule I drug to Schedule III — a change that wouldn’t legalize recreational use but could make it easier to sell, ease banking and tax restrictions, and remove obstacles to scientific research. “To demonstrate that cannabis has medical utility, we need to do large, controlled trials, but we can’t really do those if it’s a Schedule I drug,” Haney said. “As a result, that means you can’t do the studies needed to reschedule it. It’s like the chicken and egg conundrum.” A White House official said the rescheduling process is ongoing and that “all policy and legal requirements and implications are being considered.” Industry optimism has also focused on Trump’s chief of staff, Susie Wiles, who previously worked at a Florida lobbying firm that represented Trulieve, one of the largest U.S. cannabis companies, and is described by multiple industry sources as a close friend of Trulieve CEO Kim Rivers. Trulieve reportedly spent more than $100 million backing a failed ballot measure to legalize recreational cannabis in Florida, and federal filings show it donated $750,000 to Trump’s inauguration committee and $250,000 to his MAGA Inc. super PAC. Rivers attended pre-inauguration events and reportedly joined a $1 million-a-plate fundraiser at Trump’s New Jersey golf club in August, where she urged the president to reclassify marijuana; two days later, Trump made his “looking at” comments. Wiles, Rivers and Trulieve did not respond to requests for comment.

Republican roadblocks

This article was adapted from an original report published on cnbc.com. All rights belong to the original publisher.