TL;DR: Cannabis equities are maintaining elevated positions Friday morning as the Department of Justice adult-use rescheduling hearings enter a second day in Washington. The AdvisorShares Pure US Cannabis ETF (MSOS) has climbed 48.5% since the end of Q1, outpacing broader equity benchmarks, with multi-state operators leading the advance. Investors are watching the hearing proceedings closely, with any signal of favorable testimony potentially adding another leg to a rally that has already pushed the sector to its best levels of 2026.
Market Analysis
The cannabis equity rally that began in late April following the landmark Schedule III rescheduling of medical cannabis has shown remarkable staying power. As of Friday morning, the MSOS ETF — the primary institutional vehicle for U.S. cannabis exposure — is trading up 11.7% year-to-date after erasing a significant first-quarter drawdown. The ETF’s Q2 gain of approximately 48.5% from the March 31 trough represents one of the strongest quarterly recoveries in the sector’s history.
Within the MSOS basket, the six multi-state operators tracked by the Global Cannabis Stock Index have averaged a 38.1% gain since March 31. Green Thumb Industries (GTBIF) and Curaleaf Holdings (CURLF) — two of the largest MSOs by revenue — have been consistent contributors to the advance. Curaleaf’s shareholder-approved Delaware redomicile, confirmed Thursday, further clarified its path toward a potential U.S. exchange uplisting once federal regulatory conditions allow, a structural catalyst that could meaningfully expand its institutional investor base.
Canadian licensed producers, which hold U.S. options and have benefited from normalization expectations, have also participated selectively. Tilray Brands (TLRY), which reported record Q3 fiscal 2026 revenue of $206.7 million with cannabis revenue rising 19% year-over-year, has been one of the more closely watched names as a dual-listed bellwether with significant institutional sponsorship. International cannabis revenue surged 73% year-over-year, signaling that global demand dynamics continue to track favorably even as U.S. regulatory outcomes remain in process.
Organigram (OGI) and Canopy Growth (CGC) have had more mixed performance, reflecting the uneven translation of U.S. reform catalysts into Canadian operator fundamentals. The stronger showing has been concentrated in names with direct U.S. plant-touching exposure and cleaner balance sheets positioned to benefit most materially from a full 280E elimination.
Regulatory and Market Context
The market’s current optimism centers on a two-track reform process. Medical cannabis was formally rescheduled from Schedule I to Schedule III on April 23, 2026, a milestone that immediately began unwinding the most punishing element of 280E taxation for medical-side revenues. But the larger prize — a full 280E elimination — depends on the outcome of the adult-use rescheduling hearings that began Thursday and continue Friday in Washington.
The hearings, overseen by a DEA administrative law judge under DOJ supervision, are a formal evidentiary process designed to determine whether adult-use cannabis meets Schedule III criteria for accepted medical use and lower abuse potential. Industry witnesses, public health experts, and federal agency representatives are all expected to provide testimony across multiple sessions. A preliminary ruling is not expected immediately; the process could extend through Q3 2026 before a final proposed rule emerges.
The sector’s ability to sustain elevated prices through this multi-month process reflects more than optimism about the outcome. It reflects a structural repricing of tail risk: the existence of a federally sanctioned hearing record makes the most adverse outcomes significantly less probable than they appeared in early 2025. Track real-time price movements on the cannabis stock tracker, including CURLF, GTBIF, TLRY, OGI, CGC, and the MSOS ETF.
Conclusion
The cannabis sector enters the Friday session with strong technical momentum and an unprecedented regulatory catalyst still unfolding in real time. The DOJ hearings are not a binary event — any single day’s testimony is unlikely to produce dramatic market movement — but the cumulative signal from a successful evidentiary process provides a sustained foundation for equity re-rating. For institutional and informed retail investors, the current environment offers the clearest fundamental backdrop for cannabis equities since the sector’s peak in early 2021, with the trajectory of regulatory reform more unambiguously positive than at any prior point in the sector’s public market history.