Trump, 79, Scolded for Trying to Leak MAGA’s Secrets

President Trump nearly posted a decision to reclassify cannabis from Schedule I to Schedule III during an Oval Office meeting with industry stakeholders, but aides and lawyers intervened citing required procedural delays; staff were later tasked with drafting an executive order that Trump announced on Dec. 18. Attendees included Florida Sheriff Gordon Smith and Trulieve CEO Kim Rivers, whose lobbying and donations aimed to ease restrictions for medical research; the anecdote underscores political and governance frictions around a policy change that could materially affect cannabis companies and research access if fully implemented.

Analysis

Market structure: Federal rescheduling talk (Schedule I → III) is a positive structural shock for US-listed cannabis operators, medical-research CROs, testing labs and ETFs (e.g., MJ, MSOS) because it reduces criminal exposure and could widen institutional access. Immediate P&L impact is muted because 280E tax code and banking restrictions need separate Congressional/agency action; expect a 10–30% re-rating window for sentiment-driven names within 1–3 months if regulatory nitty‑gritty follows.

Risk assessment: Tail risks include a reversal by DOJ/DEA or legal challenges that could vaporize a >30% sentiment move; rulemaking has a 30–90 day administrative window and can be delayed. Hidden dependencies: Treasury/FinCEN banking guidance and IRS/280E interpretations determine realized cash-flow gains — without those, upside is capped; probability of meaningful amelioration within 6–12 months ~30–40% in our view.

Trade implications: Tactical: favor US-focused ETFs (MJ/MSOS) and selective MSOs with balance-sheet scale over Canadian LPs (TLRY, CGC), since federal rescheduling disproportionately benefits US operators; implement 1–3% position sizes with clear stops. Use options to express directional view while limiting downside: 3-month call spreads 15–25% OTM on MSOS or TLRY to capture a regulatory-driven pop with defined capital.

Contrarian angles: Consensus overweights headline “rescheduling = instant legalization” — that’s overstated. Expect stepwise improvements (research access → banking → tax) over 6–24 months; if markets price full legalization now, short-duration volatility trades (sell near-term calls) and longer-dated longs (buy LEAPs on best-capitalized MSOs) capture the mismatch.

Key Decisions for Investors

• Establish a 2–3% portfolio long position in US-focused cannabis ETFs MJ and MSOS across the next 2–6 weeks, scale in on pullbacks of 8–12%, target +30% upside over 3 months if regulatory confirmations arrive; set hard stop at -20% from entry.
• Initiate selective 1–2% equity positions in larger MSOs (e.g., Curaleaf OTC:CURLF, Tilray NASDAQ:TLRY) and 1% in Trulieve OTC:TCNNF — favor companies with >$100M cash and GMP supply chains; reduce positions if no substantive Treasury/FinCEN banking guidance within 60 days.
• Enter a 3-month call spread on MSOS (buy 15–25% OTM call, sell 30–40% OTM call) sized to risk 0.5–1% of portfolio to capture a regulatory-driven rally while capping downside; roll or take profit if ETF rallies >40%.
• Pair trade: long MSOS (1.5%) vs short CGC (0.75%) to express preference for US operators over Canadian LPs — close pair if spread tightens to <10% or widens >40%.
• Monitor specific catalysts over next 30–90 days: Federal Register notices, DEA/DOJ memos, Treasury/FinCEN banking guidance, and any IRS 280E commentary — if two of these items are resolved favorably within 60 days, increase cannabis allocation by +50% from initial sizes.