From Prediction to Reality: What Federal Reform Means for the Future of Cannabis Companies

By Adam Rosenberg, NCIA Board Chair

In 2017, I predicted Trump would legalize medical marijuana. Nine years later, federal reform is catching up, with major implications for operators, investors, and the movement going forward.

In December 2017, I was a sophomore at the University of Michigan, founding the nation’s first cannabis business student organization (Green Wolverine), when I wrote an op-ed titled “Trump Will Legalize Medical Marijuana”.

My case rested on veterans, broadening public support, and cannabis as an alternative to opioids, which was one of the key reasons I entered the industry.

Nine years, two Trump terms, and one Department of Justice order later, the reasoning held up.

What I Got Right And Wrong.

I was correct in predicting that Trump would move on medical marijuana, and why. Opioids and veterans have been central to this administration’s public messaging on reform. When it finally happened, it differed from the sweeping rescheduling that the industry had spent years waiting for. The DOJ’s order reclassified only state-licensed medical marijuana and FDA-approved products to Schedule III, while opening a new federal registration pathway through the DEA. 

For qualifying medical marijuana businesses, it functionally ends their treatment as drug traffickers by the federal government, which is closer to “legalization” for medical marijuana than many had expected from rescheduling.

What I did not predict was that the industry would fracture the way it has. In 2017, “cannabis” represented one category. Today it is effectively three: adult-use marijuana, still Schedule I; state-licensed medical marijuana, now Schedule III; and hemp-derived products, unscheduled under the 2018 Farm Bill. 

The same formulation can carry three different legal identities depending on which channel it moves through, and that has done more to complicate this industry than anything I anticipated as a student. 

I hope to soon be proven wrong in forecasting that progress under President Trump’s administration would stop at medical marijuana. The momentum behind the DEA’s broader rescheduling hearing, along with the reintroduction of bipartisan legislation like SAFE Banking, suggests something wider may follow. 

The Tax Impact

The positive signals also apply to tax relief. Although the IRS has shown early signs of clawing back 280E refunds from amended returns for prior years, including $8.3 million from TerrAscend, the broader trajectory points toward 280E becoming a nonfactor going forward. 

The rescheduling process has already cleared the path for medical operators and opened the door for creative legal arguments that 280E no longer applies for adult-use operators, which many companies are already leveraging. Retroactive relief, a concept the National Cannabis Industry Association (NCIA) proposed in a 2025 white paper, remains an open question, though it was reassuring to see it referenced in the original rescheduling order.

If rescheduling stays limited to medical, I have confidence that our industry can work with policymakers to fit state programs into the medical designation, while preserving the access and commercial markets that exist today. 

This optimism is rooted in precedent. The 2014 Farm Bill legalized hemp production strictly for research, limited to universities and institutions of higher learning. To support farmers, several states assigned their own departments of agriculture as the research institution to build de facto commercial licensing frameworks under that narrow provision. 

A successful outcome in the adult-use hearing would make this moot. In any case, legitimizing state-licensed cannabis businesses of any kind creates an opening that did not exist before, one this industry is positioned to benefit from.

A Different Relationship With Washington

The relationship between this industry and the federal government has evolved beyond any single policy discussion. Well-capitalized companies and well-coordinated advocacy organizations are gaining influence in Washington. 

A growing number of lawmakers on both sides of the aisle now understand cannabis regulation is a solution for public health, consumer safety, and transitioning resources from the underground economy into local communities.

At the same time, the industry’s own divisions are muddying its message. With the ongoing rescheduling process and impending hemp redefinition in November, commercial advantages can be reversed on a single headline. 

Depending on which side of that divide is briefing them, policymakers hear vastly different accounts of what the industry needs, and that inconsistency is encumbering the case for comprehensive reform. The good news is that hosting discussions among marijuana and hemp leadership has revealed significant agreement along with a budding appetite for collaboration.

What Operators Should Actually Expect

I am asked constantly when cannabis will be “legalized.” My answer is always the same: “What do you mean by legalized”? Cannabis is too diverse a plant, and this industry too complex a web of moral and commercial interests, for reform to arrive as a single event. It will keep arriving in phases, and rescheduling is a significant step.

Outside of legislation like SAFE Banking that has been recently reintroduced, the near-term reality is primarily procedural. The DEA’s hearing on expanding rescheduling closed earlier this month, with post-hearing briefs due by mid-August before the administrative law judge issues a recommendation and the DEA Administrator makes a final decision. 

In the meantime, most of the compliance burden remains at the state level, while federal registration adds a new layer of complexity. The difficulty for operators is deciding how to answer application questions within a framework that is being built in real time with deadlines arriving before guidance. 

While medical and adult-use remain split, operators with dual licenses will continue experiencing the challenges most acutely as they are forced to make long-term strategic decisions under short-term uncertainty.

What It Means for Capital and Valuations

None of these obstacles signal that reform has stalled. Progress is moving in accordance with the conventions of federal reform: unevenly and slower than any of us would like. What matters most is the trend line, and the direction is finally forward.

Beyond the effects on profitability, regulatory changes that matter most to valuations are the ones that change the supply-and-demand dynamic of capital, including clarity for larger investors and financial institutions. 

Cannabis stocks have moved volatilely on rescheduling news as doubt, compliance risks, and reputational concerns persist. The largest pools of capital have stayed on the sidelines, starving cannabis assets of demand and suppressing valuations below what fundamentals would otherwise support. 

Every piece of regulatory clarity chips away at the dam holding back a flood of institutional capital. We are heading toward the tipping point of fear-of-missing-out outweighing the fear of exposure, which will send valuations upward.

What Investors Should Watch Beyond Washington

Investors focused only on U.S. headlines are missing the bigger picture. International markets like Germany are signaling a broader trend toward regulating adult-use marketplaces. It is proof that the recognition of the benefits of regulation over prohibition is increasingly universal, adding greater certainty to the direction of domestic policy.

In my advisory work across investors and operators spanning marijuana, hemp, biopharmaceuticals, and ancillary businesses, my advice to fund managers and CEOs is consistently centered on the importance of adaptability. 

As the rules of this industry are being written, it is prudent to invest in companies positioned for capturing the benefits of reform, without relying on it. The operators who come out ahead will be the ones that balance efficiency with the ability to pivot quickly to meet opportunities where they emerge.

What The Future Holds

For operators, the next chapter will reward adaptability, durability, and patience. For investors, the timeline to enter at favorable valuations ahead of institutional capital, while indeterminate, is shortening. For patients, consumers, and the communities this movement exists to serve, the slow work of lifting the shadow of prohibition is progressing faster than ever.

I wrote my prediction in 2017 as a student just beginning to find my footing in the industry. Today, I am honored to volunteer my time to shape the next phase of reform as the elected Chairman of the Board of the National Cannabis Industry Association (NCIA). Leading discussions among this movement’s many stakeholders has made it clear that we all share an interest in replacing outdated prohibition with thoughtful regulation.

By working together as a unified movement, we have the power to shape a brighter future and prove that my original prediction was overly narrow.