Cannabis Market Forecast: Top Trends for Cannabis in 2025

Will the US reschedule cannabis in 2025?

The US cannabis market could see a major shift in 2025 if rescheduling finally happens.

This past May, the country's Department of Justice initiated the process to reschedule cannabis from a Schedule I substance to a Schedule III substance; then, in August, the US Drug Enforcement Administration (DEA) published a Notice of Proposed Rulemaking in the Federal Register, an important formal step.

On November 26, after a public comment period, the DEA announced it would hold a formal hearing on the matter. However, the process has encountered delays and is now not expected to be finalized until late 2025.

If successful, the move to reschedule cannabis has the potential to significantly benefit cannabis businesses by removing barriers to essential services like banking and patent protection. However, the path forward for rescheduling remains uncertain, particularly after Donald Trump's win in the US election this past November.

During a roundtable discussion with cannabis industry leaders, the online magazine Cannabis Science and Technology asked experts how the results of this election might impact the rescheduling process.

Kim Anzarut, CEO and founder of Allay Consulting, replied, “Election results will undoubtedly shape the trajectory of cannabis rescheduling. With Trump’s re-election, Trump might continue to leave cannabis policy largely to the states but could lean toward rescheduling if it proves to be a popular move that aligns with GOP support for states' rights.”

"On the other hand, new leadership could prioritize rescheduling or even push for full legalization to align with social equity and justice reform efforts. Either way, the FDA and DEA are being directed to reevaluate cannabis’ current status, which will set the stage for the inevitable regulatory overhaul," she also told the news outlet.

David Vaillencourt, founder and CEO of the GMP Collective, chairman of S3 Collective and vice chair of ASTM International Committee D37 on Cannabis Standards, also expressed his thoughts, noting, “Trying to forecast what a Trump administration might do is like picking stocks based on a fortune cookie: amusing but unreliable.”

He added, “That said, there is reason for cautious optimism. Trump’s pick for Secretary of Health and Human Services – assuming he is confirmed by the Senate — Robert F. Kennedy Jr. supports natural medicine and criticizes the FDA’s rigidness. Additionally, we saw Trump endorse Florida’s Amendment 3 to legalize adult-use cannabis. Whether this signals a genuine shift or a strategic move to outmaneuver (Ron) DeSantis is anyone’s guess."

Trump has signaled a willingness to support cannabis legalization, but several of his cabinet picks have either voted against measures to advance legislation related to the industry or have spoken out against cannabis reform.

If rescheduling is successful, it would also remove the trigger for the Internal Revenue Service tax code 280E, which prevents cannabis business owners from deducting regular business expenses.

Other legislative efforts in the US and Canada

In the event that rescheduling efforts falter, the SAFER Banking Act, which passed a House vote with bipartisan support in 2023, could provide much-needed access to financial services. However, the act is unlikely to pass through the Senate before the Congress wraps on January 3, 2025, effectively sending the initiative back to square one.

Despite this setback, there may be renewed hope for banking reform as Rep. French Hill (R-AR), a supporter of cannabis banking legislation, has been selected to serve as chair of the House Financial Services Committee.

While the US grapples with these rescheduling and banking complications, Health Canada is proposing a series of changes to ease the administrative burden and reduce spending and wait times.

Some of the changes proposed in June include simplifying licensing, production and security clearance requirements, increasing production limits for “micro-cultivators” and making it easier for licensees to submit required reports to Health Canada. Comments submitted by the public are currently under review.

US cannabis industry growth to continue

Even as the US cannabis industry faces setbacks it remains primed for growth, with sales projected to hit US$71.8 billion by 2028, according to an Ocean Como market report that cites data from IBIS World.

This upward trajectory will be fueled by legalization efforts, new market entrants and product innovation.

Research and product development will maintain their importance as the industry adapts. This is creating opportunities for businesses specializing in research, testing and product formulation. If cannabis ends up being rescheduled, that could help the sector attract research funding from the healthcare and wellness sectors.

Maridose, a DEA-licensed cannabis producer, launched a Series A funding round at the Benzinga Cannabis Capital Conference in October. After the DEA initiated rescheduling proceedings in May, Maridose told Reuters that it had “been receiving more inquiries from both non-profits and commercial entities, including state-licensed cannabis firms.”

Market consolidation is set to continue in 2025, and mergers and acquisitions will create opportunities for both established players and emerging companies to expand market share and access new resources.

“Those who have the cash and ability to expand can find great deals from those who are out of time,” Steven Ernest, vice president of originations for Chicago Atlantic, said at MJBizCon in early December. “It is always darkest before the dawn, and now is the time to be aggressive and acquire cash flow-generating assets."

At the state level, recreational cannabis is legal in 24 states in the US, while medical cannabis is legal in 40. Looking forward to the new year, Minnesota is slated to begin recreational sales in 2025, although there have already been delays. A bill to legalize medical marijuana was also recently re-introduced in South Carolina.

The hemp sector, a significant part of the cannabis market, faces a dynamic landscape. While the 2018 Farm Bill legalized hemp cultivation, the proposed Rural Prosperity and Food Act takes a more restrictive approach to the definition of hemp by considering all forms of THC, not just delta-9, and capping the total THC content at 0.3 percent.

This potential shift could impact the regulation of CBD and other hemp-derived cannabinoids, creating both opportunities and challenges for hemp businesses as they adapt to changes.

Major cannabis players moving forward

Major players Curaleaf Holdings (TSX:CURA,OTCQX:CURLF), Trulieve Cannabis (CSE:TRUL,OTCQX:TCNNF), Green Thumb Industries (CSE:GTII,OTCQX:GTBIF), Verano Holdings (OTCQX:VRNOF) and Tilray Brands (NASDAQ:TLRY,TSX TLRY) continue to dominate the cannabis retail and production space, holding significant market share.

Meanwhile, Canopy Growth (NASDAQ:CGC,TSX:WEED) possesses an advantage with its sizeable patent portfolio, a testament to its commitment to research and development.

Lesser-known retailer and producer Goodness Growth was rebranded as Vireo Growth (CSE:VREO,OTCQX:VREOF) in July and underwent a leadership transition in October. The company reported solid Q3 results, and CEO Amber Shimpa expressed optimism about its prospects, particularly in the burgeoning Minnesota market.

On December 18, the company raised US$75 million in equity financing and announced its intention to expand its market share with the acquisition of four single-state operators.

As the cannabis industry continues to mature, these and other companies will be battling for dominance in a rapidly evolving market.