Cannabis Stocks Rally to Best Weekly Performance This Year
Major cannabis equities surge as sector momentum builds, driven by regulatory optimism and institutional interest returning to beaten-down names.
Cannabis equities are posting their strongest weekly gains of 2024, with major operators and ancillary players climbing as institutional money flows back into the sector. The AdvisorShares Pure US Cannabis ETF (MSOS) has gained over 8% this week, while individual names like Curaleaf (CURLF) and Green Thumb Industries (GTBIF) are up double digits as trading volumes spike across the board.
The rally comes as investors reassess valuations in a sector that has been trading at historic lows despite strong operational fundamentals. Multi-state operators have delivered consistent revenue growth and improving margins, yet many trade at fractions of their 2021 peaks. This disconnect between performance and price has created opportunities for value-focused institutional buyers who previously avoided cannabis exposure.
Regulatory momentum continues building momentum behind the scenes, with DEA rescheduling proceedings advancing and state-level expansion accelerating. The potential shift from Schedule I to Schedule III classification would eliminate the punitive 280E tax burden that has constrained operator profitability for years. Industry executives estimate this change alone could boost EBITDA margins by 15-20 percentage points across major operators.
Banking reform also appears closer to reality as bipartisan support grows for the SAFER Banking Act. Access to traditional financial services would reduce operational costs and enable more efficient capital deployment, particularly for expansion into newly legal markets. Several regional banks have already begun preliminary discussions with cannabis operators in anticipation of federal clarity.
The sector's technical setup supports continued upside as short interest remains elevated and institutional ownership sits near multi-year lows. Any sustained buying pressure could trigger significant short covering, amplifying gains across cannabis names. With several operators trading below book value despite generating positive cash flow, the risk-reward profile has shifted decidedly in favor of long positions for the first time since early 2021.