Trump’s Positive Public Comments on CBD Spurs Investor Gains
Summarize
In September, President Donald Trump posted on his Truth Social platform that he is open to the idea that Medicare could cover CBD products. The market response was strong and swift, with cannabis stocks for major listed companies experiencing double-digit gains overnight. This is dubbed the “Trump Effect.”
When any President hints at policy changes, the market responds. In this case, Adam Smith, with the Marijuana Policy Project, said,
“When Trump hints at support for cannabis products, markets interpret it as a signal that wider Republican backing might follow.”
It will take Congressional approval to change current laws.
The U.S. Drug Enforcement Administration (DEA) is reviewing whether marijuana should be changed from a Schedule I drug to a Schedule III drug. Schedule III is the schedule that includes anabolic steroids. The rescheduling does not make cannabis legal, but it would lift the severe restrictions that cannabis retailers must contend with. Lifting some of the extreme tax and banking restrictions would have numerous benefits, including lower borrowing costs and the ability to deduct business expenses.
Currently, Congress is debating new regulations for hemp-derived CBD. The 2018 Farm Bill legalized hemp, a cannabis plant with less than 0.3% THC on a dry weight basis. It is supposed to be reviewed and revised every five years. The first five-year review period was missed, and the original bill remains under debate. CBD is non-psychoactive. The complication that has developed over the years, due to a lack of regulation, is that products with synthetic CBD are being sold, and they are psychoactive.
Congress is debating the legality of various CBD products, as well as the labeling, testing, and safety requirements associated with them. Currently, CBD is not regulated by the Food and Drug Administration. There is only one CBD-based medicine called Epidiolex. The lack of federal CBD regulation and guidance on synthetic CBD has led to many states passing their own laws.
As a result, the CBD industry is in turmoil. Retailers believe that regulatory reform will accelerate the growing global market for cannabis-derived products. There are three factors expected to influence the cannabis retail industry in 2026.
- The result of the DEA rescheduling of marijuana.
- The new Farm Bill wording addresses hemp and CBD amounts, types, and other related matters.
- The Trump administration’s signals.
Grand View Research predicts the global market for cannabis products will reach $160 billion by 2032. It is hoped the Trump Effect will spur debate that leads to new laws and regulations. The hemp and CBD retail industry members have made it clear they will adapt to any federal laws and regulations. What is needed is legal certainty.
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