Investing in Cannabis: Navigating Policy Reform and Market Opportunities

The marijuana industry is experiencing unprecedented growth, attracting substantial interest from investors, producers, and scientific communities. Although marijuana remains federally classified as a Schedule I substance, market projections indicate a remarkable expansion from $38 billion in 2024 to an estimated $57 billion by 2028 in the legal retail sector.

Currently, medical marijuana has gained legal status in 38 states plus the District of Columbia. Furthermore, as of May 2024, recreational use for adults has been approved in 24 states and the District of Columbia. This trend toward legalization appears poised to continue as public acceptance of marijuana grows throughout the United States.

This article examines the current landscape of the legal marijuana industry and explores its future growth potential.

Key Takeaways

A majority of the American population supports marijuana legalization.
Medical marijuana is now legal in 38 states, while 24 states permit recreational use among adults.
Evolving policies reflect our growing understanding of marijuana’s medical applications and derived products.
The U.S. Department of Justice’s 2024 proposal to reclassify marijuana from Schedule I to Schedule III would facilitate more extensive research into its benefits and potential risks.

Changing Attitudes Toward Marijuana

Public perception of marijuana in the U.S. has undergone a dramatic transformation since the days of the notorious 1936 film “Reefer Madness”—an ostensibly educational piece that has since become a satirical cult favorite. The film’s depiction of high school students descending into criminal madness after trying marijuana now seems absurdly outdated.

Recent years have witnessed a significant uptick in marijuana consumption among Americans. Statistics from 2023–24 show that 15% of Americans admit to using marijuana, marking a substantial increase from 7% in 2013. Demographics play a crucial role in usage patterns: 26% of individuals aged 18-34 report using marijuana, contrasting with 11% among those 55 and older. Gender differences are notable, with men showing higher usage rates than women (19% versus 14%). Educational background also influences consumption, as college graduates report lower usage (9%) compared to non-graduates (21%). Political affiliation shows a marked divide, with Democrats (23%) reporting higher usage than Republicans (10%).

While marijuana users represent a minority of the population, legalization enjoys broad public support. A comprehensive Pew Research Center study reveals that 88% of Americans endorse marijuana legalization for either medical or recreational purposes, with 59% supporting both applications.

Important

The U.S. Department of Justice has proposed reclassifying marijuana from a Schedule I drug to a Schedule III drug.

Marijuana currently maintains its Schedule I classification under federal guidelines, though the Justice Department has initiated steps toward reclassifying it as a Schedule III substance. This potential reclassification would maintain federal restrictions but allow for prescription-based distribution. Furthermore, it would ease limitations on medical research and reduce certain penalties associated with illegal possession.

Policy Reform

The momentum of state-level marijuana policy changes has energized advocates pushing for federal legislative reform.

In a significant move, President Joe Biden issued pardons for various marijuana-related offenses, encompassing possession, attempted possession, and basic use charges. However, his administration’s most impactful initiative came through the Department of Justice’s proposal to recategorize cannabis into the less stringent Schedule III classification.

The SAFE Banking Act represents another crucial development for the cannabis industry. Currently, marijuana-related enterprises face significant obstacles in accessing conventional banking services, including basic account services and credit facilities, due to federal prohibition. The bipartisan-supported SAFE Banking Act aims to prevent federal banking regulators from imposing penalties on financial institutions serving state-approved marijuana businesses. The Senate’s companion legislation carries the title SAFER Banking Act.

Under existing regulations, financial institutions risk losing their deposit insurance by providing banking services or loans to cannabis companies, severely limiting these businesses’ access to capital and payment processing capabilities. While the SAFE Banking Act was directed to a House subcommittee in mid-2023, and the SAFER Banking Act cleared an important Senate committee later that year, neither piece of legislation has achieved full congressional approval.

Donald Trump, Biden’s predecessor who resumed the presidency in January 2025, has yet to articulate his current position on marijuana reform, though his previous statements have suggested favorable views toward both cannabis reclassification and the SAFE Banking Act.

CBD

Throughout history, diverse cultures have utilized marijuana for medicinal purposes, and its therapeutic potential continues to gain recognition, particularly for managing conditions like chronic pain, anxiety, and seizure disorders.

CBD (cannabidiol) has emerged as another significant player in this space. This natural cannabis-derived compound offers non-psychoactive properties, meaning it doesn’t produce intoxicating effects. However, it’s reported to address many conditions traditionally treated with marijuana, including pain management, anxiety relief, and depression treatment. CBD products appear in various forms, including oils, oral sprays, topical creams, capsules, and edible products such as gummies and lollipops.

Industry analysts at Global Market Insights project the North American CBD market to expand dramatically from $22.8 billion in 2023 to $108 billion by 2032. This explosive growth potential has attracted major corporate players, including Philip Morris and Altria Group, who are actively investing in marijuana-related ventures.

The FDA and CBD: Softening Stance?

The Food and Drug Administration (FDA) maintains regulatory oversight of CBD products in the United States. A landmark decision came in June 2018 when the agency granted approval to Epidiolex, marking the first-ever marijuana-derived medication to receive FDA authorization. The Drug Enforcement Administration (DEA) subsequently classified it as a Schedule V substance, indicating minimal abuse potential.

Nevertheless, federal regulations currently prohibit the inclusion of CBD in food products and dietary supplements, a restriction the cannabis industry actively seeks to modify. The FDA has acknowledged that the existing regulatory framework inadequately addresses CBD products’ distinct characteristics and risks. The agency has expressed commitment to collaborating with Congress to establish guidelines that balance consumer demand for CBD products with essential safety considerations, offering encouragement to numerous companies investing in this compound.

Big Marijuana

Industry analysts predict the imminent rise of Big Marijuana, particularly if the SAFE/SAFER Banking Act passes or federal legalization occurs. The legal cannabis sector is expected to mirror consolidation patterns observed across other industries, with significant merger activity already underway and more anticipated.

Boris Jordan, Curaleaf’s co-founder and executive chairman, offers a candid industry forecast: “While it might not be a popular perspective, I anticipate the cannabis sector evolving over the next 10-15 years to feature between five and ten dominant players at most.”

The industry’s technological evolution presents additional investment opportunities through “cannatech” or “weedtech” ventures. Notable among these is Dutchie, an ecommerce and point-of-sale solution provider for cannabis merchants, which secured $100 million in funding at a $400 million valuation in early 2024. The sector increasingly incorporates advanced technologies, with terms like machine learning, automation, and blockchain becoming more prevalent.

Will Medical Marijuana Market Continue to Grow as Recreational Marijuana Spreads?

Projections indicate robust growth in the medical marijuana market, potentially reaching $27 billion by 2026, despite increasing recreational cannabis accessibility.

How Do Cannabis Businesses Bank?

Federal regulations expose banks to potential loss of deposit or share insurance when servicing cannabis businesses. Despite these risks, select local and regional financial institutions opt to support cannabis enterprises.

Why Is There So Little Research on the Effects of Marijuana?

Marijuana’s Schedule I classification until 2024, defining it as a substance with no accepted medical applications and high abuse potential, created significant research barriers. Scientists faced numerous obstacles, including background verification requirements, strict substance tracking and disposal protocols, specific sourcing criteria, and extensive administrative requirements.

The Bottom Line

Since California pioneered medical marijuana legalization in 1996, the cannabis industry has undergone remarkable transformation, establishing itself as a permanent fixture in the American economy. With regulatory frameworks becoming increasingly accommodating and more states embracing legalization, industry experts anticipate exceptional growth momentum in the marijuana sector over the upcoming years.

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1) What is the projected growth of the marijuana market?

Market projections indicate growth from $38 billion in 2024 to $57 billion by 2028 in the legal retail sector.

2) How many states have legalized medical marijuana?

Medical marijuana is legal in 38 states plus the District of Columbia.

3) What is the U.S. Department of Justice’s proposal regarding marijuana?

The proposal aims to reclassify marijuana from Schedule I to Schedule III, facilitating more research and reducing penalties.

4) What impact does the SAFE Banking Act have on cannabis businesses?

The SAFE Banking Act aims to prevent penalties on banks serving state-approved marijuana businesses, improving access to banking services.