Pot reclassification is not enough to move the needle, analyst says

Haywood analyst Neal Gilmer said the U.S. decision to immediately reclassify state-licensed medical marijuana from Schedule I to Schedule III is positive for cannabis operators, but narrower than investors may have hoped.

In his April 23 report, Gilmer noted acting Attorney General Todd Blanche signed the order while also launching an expedited administrative hearing, set to begin in June 2026, to consider broader rescheduling for recreational cannabis.

Gilmer said the most direct effect is the removal of IRS Section 280E for qualifying medical operators, allowing them to deduct ordinary business expenses and be taxed more like traditional corporations. He said that should improve net income and cash flow, although the practical benefit may be limited because many MSOs have already challenged 280E.

The April 23 order doesn’t legalize cannabis nationally, doesn’t permit interstate commerce and, in Gilmer’s view, isn’t enough on its own to trigger uplisting to the NYSE or Nasdaq. He said the exchanges will likely still require explicit congressional action, such as SAFE Banking, before allowing U.S. plant-touching operators to list.

Gilmer said the announcement may still disappoint some investors because it applies only to medical cannabis sold through state-licensed programs. He noted the MSOS ETF had risen 23.3% from President Donald Trump’s weekend comments through Wednesday’s close, before falling 6.5% after the order was signed.

The next catalysts, Gilmer said, will be the scope of the June hearing, the IRS response to Department of Justice language encouraging retrospective 280E relief, and any movement on SAFE Banking.

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