"Amplify Seymour Cannabis ETF ( NYSEARCA:CNBS) posted a 17% gain in 2025, but that masks the real story. The fund surged 37% in December alone after President Trump signed an executive order directing Attorney General Pam Bondi to complete rulemaking for reclassifying marijuana from Schedule I to Schedule III under the Controlled Substances Act. Reddit investors have been overwhelmingly bullish, with sentiment scores averaging 82 over the past quarter."
"The biggest factor affecting CNBS in 2026 is eliminating Section 280E of the Internal Revenue Code, which prohibits cannabis companies from deducting ordinary business expenses. This tax provision forces operators to pay taxes on gross income rather than net income. The impact is brutal: a cannabis company with $1 million in revenue and $250,000 in operating expenses might owe ~$150,000 in taxes while an identical non-cannabis business with normal operations would owe roughly half as much (using some basic assumptions about operating expenses)."
"Once marijuana moves to Schedule III, that penalty disappears. Cannabis companies will suddenly deduct payroll, rent, marketing, and other normal expenses just like any other business. For many operators, this fundamentally reshapes cash flows and profitability. As Casa Verde Capital noted after Trump's announcement, the change allows the industry to finally operate like a real consumer or healthcare category. This opens the door to institutional capital."
Amplify Seymour Cannabis ETF (CNBS) returned 17% in 2025 and jumped 37% in December after President Trump ordered DOJ rulemaking to reclassify marijuana from Schedule I to Schedule III. Reddit investor sentiment averaged 82 over the past quarter. Schedule III reclassification would remove Section 280E’s restriction on deducting ordinary business expenses, converting tax treatment from gross-income to net-income basis and materially improving cash flows and profitability. A simple example shows a cannabis firm with $1 million revenue and $250,000 expenses could owe about $150,000 in taxes today versus roughly half that without 280E. Implementation timing hinges on a 30-day comment period, DOJ rulemaking, and IRS guidance in early 2026.
Read at 24/7 Wall St.
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