Cannabis stocks were supposed to be the next big thing in 2019. The boom went bust, the bubble deflated, and most investors lost money. In 2026, the sector is smaller, more realistic, and — for the right investor — more interesting than it's been in years.
Originally published October 12, 2019 · Updated May 2026
When this article was first published in 2019, cannabis stocks were one of the hottest trades on the market. Canopy Growth, Aurora Cannabis, and Cronos were household names among retail investors. The hype was real — and so was the subsequent crash.
Fast forward to 2026, and the cannabis sector is back in the spotlight — but for a fundamentally different reason. In April 2026, the Trump administration formally reclassified marijuana from a Schedule I controlled substance to Schedule III under the Controlled Substances Act. It is the most significant federal cannabis policy reform in more than half a century, and it changes the investment case for cannabis stocks in ways the 2019 crowd could only dream about.
This is the updated guide: what the rescheduling means, which indices and ETFs to follow, how to trade them, and what the risks still look like in 2026.
The Investment Case: What Rescheduling Actually Changes
To understand why the April 2026 reclassification matters so much, you need to understand the problem it solves.
Under Schedule I status, cannabis was treated by the IRS under Section 280E of the tax code — a provision that prevented cannabis companies from deducting standard business expenses. A cannabis retailer couldn’t deduct rent, salaries, or cost of goods sold the way any other business could. The effective tax rate for many multi-state operators was running at 70–80% of gross profit. It was an extraordinary competitive handicap baked into federal law.
Reclassification to Schedule III removes that burden. For the first time, cannabis companies operating legally under state medical programs will be able to deduct normal business expenses, dramatically improving their cash flows, net income, and balance sheets. The rescheduling also opens the door to institutional investment — many funds have mandates that prevent them from holding Schedule I substances — and clears a path toward more normal banking relationships for an industry that has operated largely in cash.
This is not full federal legalisation. Cannabis remains a controlled substance. But it is a transformative shift in the economics of the legal cannabis industry.
What Happened Between 2019 and 2026
For context, the journey from the 2019 hype to today has been brutal for cannabis investors.
The stocks that were soaring in 2019 — Canopy Growth (CGC), Aurora Cannabis (ACB), Cronos (CRON) — collapsed dramatically through 2020, 2021, and 2022 as the promised US federal legalisation never came, cash burn continued, and retail enthusiasm faded. The Marijuana North American Stock Index, which was already trading at multi-year lows in 2019, went much lower.
The sector spent 2023 and 2024 in a deep bear market. Then, in mid-2025, credible reports emerged that the federal government was seriously considering the Schedule III reclassification. Stocks began recovering. President Trump signed an executive order in December 2025 directing federal agencies to expedite the rescheduling process. The formal reclassification followed in April 2026.
MSOS has surged 73.6% over the past year. CNBS has surged 56.4% over the past year. WEED has rallied 84.3% over the past year. The sector has woken up — but it remains well below its 2019 and 2021 peaks, which means the debate about whether there is still significant upside is live and genuine.
The Main Cannabis Indices to Follow
There are several cannabis indices worth tracking, serving different purposes:
- The Cannabis Index (^CANNABIS) — tracks the broader cannabis sector globally
- The Marijuana Index – North America — focuses on the largest cannabis companies listed in the US and Canada
- The Global Cannabis Stock Index — broader global exposure including emerging markets
For most investors, the index itself is less important than the ETFs and individual stocks that provide practical exposure to the sector.
The Best Cannabis ETFs in 2026
ETFs are the most practical way for most investors to get cannabis exposure — they provide instant diversification across the sector rather than concentrating risk in a single stock.
MSOS — AdvisorShares Pure US Cannabis ETF
MSOS is the largest and most closely watched cannabis ETF in the world, with assets under management of over $1 billion. MSOS is the first actively managed US-listed ETF with dedicated cannabis exposure focusing only on US companies, including multistate operators.
Its top holdings include Curaleaf, Green Thumb Industries, and Trulieve Cannabis — the three largest multi-state operators in the US market. Because many cannabis companies face listing restrictions on major exchanges, MSOS uses total return swaps to gain exposure to Canadian-listed US operators, a workaround that introduces counterparty risk and can create tracking differences versus direct equity ownership.
MSOS lowest ETF price was $2.06 and its highest was $7.25 in the past 12 months — a wide range that reflects just how news-driven and volatile this sector remains. The April 2026 rescheduling announcement sent the fund sharply higher; the current price sits around $4.
Expense ratio: 0.78%
Best for: US-focused cannabis exposure, active traders, investors who want the largest and most liquid cannabis ETF
YOLO — AdvisorShares Pure Cannabis ETF
YOLO provides broader global cannabis exposure, balancing US multi-state operators with ancillary businesses and international cannabis companies not subject to US federal restrictions. It is a secondary choice for investors who want cannabis exposure beyond the US market, or who want to reduce single-market regulatory risk.
CNBS — Amplify Seymour Cannabis ETF
An actively managed fund offering exposure to US cannabis companies across the ecosystem — cultivation, retail, technology, and ancillary services. CNBS charges 76 basis points in fees.
WEED — Roundhill Cannabis ETF
A more concentrated fund focused on the largest US cannabis companies. WEED charges a net expense ratio of 0.00% until at least May 1, 2026. Worth checking whether that fee waiver has been extended before investing.
How to Trade the Cannabis Index
Option 1: ETFs (Recommended for Most Investors)
Buying one of the ETFs listed above is the simplest and most diversified approach. ETFs trade on stock exchanges like regular shares — you can buy and sell them through any standard brokerage account during market hours.
For non-US residents, access to these US-listed ETFs depends on your broker and your country’s regulations. Many international brokers provide access to US-listed ETFs directly.
Option 2: CFDs (Contracts for Difference)
CFDs allow you to trade cannabis indices and individual cannabis stocks without owning the underlying asset. This is the most accessible route for investors outside the US, and CFDs allow you to go both long (betting the price rises) and short (betting it falls) — meaning you can potentially profit whether the sector goes up or down.
Several CFD brokers offer cannabis ETF and individual cannabis stock CFDs. If you are not familiar with CFDs, read our guide — Trading CFDs: Good or Bad? — before proceeding. CFDs involve leverage, which amplifies both gains and losses, and are not suitable for all investors.
CFD trading carries a high level of risk. A significant percentage of retail investor accounts lose money when trading CFDs. Make sure you understand the risks before investing.
Option 3: Individual Stocks
For investors with a higher risk tolerance and a strong view on specific companies, individual cannabis stocks offer concentrated exposure. The main US multi-state operators worth researching include:
- Curaleaf Holdings (CURLF) — the largest US cannabis company by revenue
- Green Thumb Industries (GTBIF) — one of the most financially disciplined operators
- Trulieve Cannabis (TCNNF) — Florida-dominant with strong market share
- Verano Holdings (VRNOF) — vertically integrated across multiple states
- Cresco Labs (CRLBF) — strong wholesale and retail footprint
Note that most of these trade over-the-counter (OTC) rather than on major exchanges, which affects liquidity and access through some brokers.
The Risks — Be Honest With Yourself
The rescheduling is genuinely significant. But the cannabis sector has disappointed investors before, and the risks haven’t disappeared.
Regulatory risk remains. Schedule III is not legalisation. Cannabis remains federally controlled, and future administrations could reverse or slow the reform process. Banking access is improved but not fully normalised. Interstate commerce of cannabis remains restricted.
The stocks are still volatile. The whipsaw between MSOS climbing to $6.45 in mid-December 2025 and dropping 26% to around $4.80 by mid-January 2026 — despite positive policy news — illustrates the tension investors face. Policy-driven rallies can reverse quickly when implementation stalls.
The companies are still mostly unprofitable. Even with the 280E tax burden removed, most cannabis operators are not yet consistently profitable. The rescheduling improves the economics significantly — but it doesn’t immediately turn loss-making businesses into cash machines. Revenue growth and margin improvement still need to materialise.
State-level market saturation. In mature legal states like Colorado and California, intense competition has compressed margins and pushed some operators out of business. The national picture is uneven.
The Bottom Line
The cannabis investment case in 2026 is genuinely more compelling than it has been at any point since 2019 — not because of hype, but because of a structural policy change that materially improves the economics of the legal cannabis industry. The removal of the 280E tax burden is real and significant.
The sector is also coming off multi-year lows, with most stocks and ETFs still well below their all-time highs despite the recent rally. For investors who believe the rescheduling represents the beginning of a longer normalization of the US cannabis market, the current entry point is more interesting than it was a year ago.
But this remains a high-risk, high-volatility sector where regulatory developments — not earnings — drive prices. Size your position accordingly, diversify through ETFs rather than individual stocks unless you have a strong conviction on specific operators, and keep a close eye on any further federal policy developments.
This article is for informational purposes only and does not constitute financial advice. Always do your own research before investing. CFD trading carries a high level of risk and may not be suitable for all investors.