Cannabis Market Update: H1 2025 in Review

US cannabis reform continues to stall

As mentioned, H1 was significantly shaped by ongoing discussions and actions surrounding US cannabis policy.

The anticipated federal rescheduling of cannabis faced significant procedural delays and legal challenges early in the year. In January, a scheduled DEA hearing was canceled due to the agency's failure to submit required documents.

This period of time also saw the departure of DEA head Anne Milgram, who had held the position since mid-2021. Derek Maltz, who has expressed strong opposition to cannabis reform, briefly filled the role of acting administrator; the position is now held by Robert Murphy, but no permanent appointment has been made.

By April, the DEA had confirmed that rescheduling remained on hold, with former DEA and Department of Health and Human Services officials suggesting it could be indefinitely stalled without presidential intervention. The White House's Office of National Drug Control Policy omits any mention of rescheduling in its drug policy priorities report.

The potential economic impact of cannabis legalization in the US is hard to ignore.

Analysis from Marijuana Policy Project shows that states have collected US$24.7 billion in tax revenue from legal adult-use cannabis sales since the first markets launched in 2014, including US$4.4 billion in 2024 alone. This figure underscores the substantial fiscal contributions of the legal cannabis sector.

Regulatory shifts are also impacting the hemp market. The House Committee on Appropriations voted to approve a bill on appropriations for agriculture, rural development, Food and Drug Administration and related agency programs on June 23; it includes provisions to redefine “hemp” to exclude any product with “quantifiable” THC.

This would effectively ban intoxicating hemp products like delta‑8, delta‑9 and THCA; however, lawmakers have agreed to delay implementation by one year to allow industry adjustments.

Beyond rescheduling, the critical issue of cannabis banking reform continues to face significant legislative roadblocks. The SAFER Banking Act was blocked from being attached to a government funding bill in December 2024, pushing the issue into the new Congress. Despite some chatter online, a staffer for one of the bill’s sponsors, Representative Dave Joyce (R-OH), clarified in January that reintroducing such legislation was “not imminent."

Adding to the financial burden cannabis companies face, Q2 saw a trend of persistent federal regulatory and legislative impediments impacting the viability and operational capabilities of cannabis businesses in the US.

In February, both House and Senate lawmakers introduced bills aimed at preventing cannabis businesses from taking federal tax deductions under Section 280E, even if cannabis were to be rescheduled.

Then, in May, the Small Business Administration further clarified that marijuana businesses are ineligible for key federal loan programs, regardless of state-level legality.

This legislative pressure is creating uncertainty for investors in the cannabis sector.

“This delay is going to have a substantial impact on the industry,” Dotan Y. Melech, CEO and co-founder of CTrust, wrote in commentary provided to the Investing News Network in January.

“As 280E will remain enforced, we will likely see further profit compression and increased delinquencies across the industry. However, states will continue to issue additional licenses, consumer demand will increase, new banks will enter the space, and debt will remain the predominant financing vehicle," he continued.

“Best-in-class cannabis businesses will have the opportunity to access financing and banking services, setting the bar for creditworthiness in the industry. We remain cautiously optimistic, and we must be prepared for all scenarios.”

There has been some positive momentum since the passing of the Big Beautiful Bill in July, which also contains an amendment that could end the medical cannabis ban in the Veterans Affairs healthcare system.

Attention is expected to return to the SAFER Banking bill in the Senate this fall, according to Senator Bernie Moreno, a key Republican supporter of the cannabis banking bill in the Senate.

In Canada, the Cannabis Council of Canada has urged Prime Minister Mark Carney to take action to aid the cannabis industry, including by reforming tax policies. The issue of high taxation for Canadian cannabis companies has been a persistent concern since legalization.

Mixed performances from cannabis companies

With that backdrop in mind, the first half of 2025 presented a nuanced financial landscape for cannabis companies, characterized by mixed financial performances and a general trend of net losses.

For example, Tilray Brands' (NASDAQ:TLRY) results for its second fiscal quarter, released in January, show a 9 percent increase in net revenue from Q2 2024 and a 29 percent increase in gross profit, with its cannabis business segment growing by 35 percent to US$66 million in revenue. However, in April, Tilray Brands reported a significant quarterly net loss of US$793.5 million, alongside net revenue of US$185.8 million for the period.

The general trend of revenue growth alongside persistent net losses for many operators indicates a sector still navigating the complexities of scaling in a restricted federal environment.

Some cannabis companies have engaged in acquisitions this year. In April, SNDL (NASDAQ:SNDL,CSE:SNDL) expanded its retail footprint by acquiring 32 cannabis retail stores in Canada. The company also began trading on the Canadian Securities Exchange on April 11, expanding its investor base and capital markets access.

Additionally, Organigram Global (TSX:OGI,NASDAQ:OGI:US) made a strategic move with its acquisition of Collective Project, providing immediate access to the US hemp-derived THC beverage market, which has grown thanks to relaxed drug regulations fueling rapid growth. Projections estimate that the global subsector could become a US$8.7 billion industry by 2033, though continued growth is uncertain due to regulatory complexities.

Meanwhile, cannabis lounges began emerging in the US, with California's law allowing them taking effect in January. The New Jersey Cannabis Regulatory Commission also began accepting applications for marijuana consumption lounge licenses in January.

Investor takeaway

The continued dynamic between growing consumer demand for cannabis products and the prevailing restrictive federal framework will undoubtedly shape investment opportunities and risks in the quarters to come.

The industry continues to demonstrate robust sales growth. According to LeafLink’s spring State of the US Cannabis Industry report, sales could reach US$55 billion by 2030, bolstered by new license issuances in key states — Ohio and New York, in particular — and future legalization in large population centers, further supported by a stabilization and slight recovery in average prices, and an industry-wide effort to overcome significant operational cost challenges.

Moving forward, the interplay between ongoing restrictions coupled with rising demand will define the opportunities and risks for cannabis businesses and investors alike.