President Trump signed an executive order directing regulators to move cannabis from Schedule I to Schedule III, a shift that could meaningfully change how investors access US weed stocks. The move would ease punitive tax treatment for US operators, making them instantly more profitable, and could lower compliance barriers that have kept cannabis off-limits for many banks, exchanges, and asset managers.
Industry analysts say institutional interest is already picking up. Frederico Gomes of ATB Capital Markets noted that expectations around rescheduling have led to an uptick in inbound interest from larger investors. Still, marijuana would remain federally illegal, meaning the path for capital inflows is opening, not fully open.
Why $MSOS matters and options are limited
For now, the AdvisorShares Pure US Cannabis ETF $MSOS ( ▲ 2.56% ) is still the main way institutions gain exposure. US cannabis companies cannot list on the NYSE or Nasdaq, so they trade over the counter with limited liquidity. $MSOS gets around this by holding swaps tied to underlying cannabis stocks rather than owning the shares directly, which allows it to trade on a major exchange.
Assets in $MSOS have surged to nearly $1.3 billion, up from about $600 million a month ago, showing growing interest. But the structure comes with volatility. The ETF relies on bank counterparties to hedge illiquid positions, and price swings can be amplified, especially during news-driven moves. That dynamic was on full display when rescheduling headlines coincided with a sharp drop in $MSOS.
As one cannabis executive put it, institutional capital is likely coming. The real question is how fast it can move beyond ETFs like $MSOS and into the underlying stocks themselves.