Table of Contents
- Executive Summary
- Trump’s Cannabis Policy Shift
- The 55-Year-Old Law Under Fire
- Market Impact and Stock Performance
- Commercial Real Estate Revolution
- Banking and Financing Transformation
- Investment Opportunities
- Regulatory Timeline and Implications
- Challenges and Considerations
- Future Outlook
- Call to Action: Partner with ElkPenn
Executive Summary
The cannabis industry stands on the precipice of its most significant transformation in over half a century. President Donald Trump confirmed on Monday that his administration is “looking at” reclassifying marijuana as a less dangerous drug, with a decision expected “over the next few weeks.” This potential policy shift could unleash a $63 billion industry revolution, fundamentally transforming commercial real estate financing, banking access, and investment opportunities across the United States.
Key Takeaways:
- Cannabis reclassification from Schedule I to Schedule III could happen within weeks
- The U.S. cannabis market, valued at $38.50 billion in 2024, is projected to reach $76.39 billion by 2030
- Commercial real estate operators could gain unprecedented access to traditional banking and lower interest rates
- Tax benefits and operational improvements could make cannabis properties significantly more profitable
Trump’s Cannabis Policy Shift
The political landscape around cannabis has shifted dramatically since Trump’s return to the White House. During his campaign, Trump wrote on Truth Social: “As President, we will continue to focus on research to unlock the medical uses of marijuana to a Schedule 3 drug, and work with Congress to pass common sense laws, including safe banking for state-authorized companies, and supporting states’ rights to pass marijuana laws.”
This represents a marked evolution from traditional conservative positions on drug policy. The Wall Street Journal reported that Trump told attendees at a recent fundraising dinner that he was interested in reclassifying the drug, signaling serious consideration beyond campaign rhetoric.
Industry Backing and Political Pressure
The momentum behind reclassification has significant financial backing. Trulieve, a marijuana dispensary company, and the U.S. Cannabis Council gave a combined $1 million to Trump’s presidential inauguration in 2024. Additionally, Scotts Miracle-Gro CEO James Hagedorn told Fox Business that Trump has privately assured him and others “multiple times” that he plans to reclassify marijuana to a less controlled category of substances.
The 55-Year-Old Law Under Fire
The Controlled Substances Act of 1970 established the drug scheduling system that has defined federal marijuana policy for over five decades. Cannabis is currently classified as a Schedule I drug, putting it in the same category as heroin, LSD and ecstasy. Under the Drug Enforcement Administration’s classification system, Schedule I drugs are defined as those with “no currently accepted medical use and a high potential for abuse”.
This classification has created a complex web of legal and financial challenges:
Current Legal Framework
- Federal Level: Possession punishable by up to one year in prison and minimum $1,000 fine
- State Level: 24 states have legalized recreational use, with 40+ states allowing medical use
- Business Operations: Companies face severe banking restrictions and tax penalties
The Reclassification Process
Technically, the president does not have the power to reclassify a drug himself, with the responsibility being left to the attorney general, in this case, Pam Bondi. The attorney general then delegates the job to the DEA, which gathers information and opinions on the matter before issuing its decision.
However, presidential direction can significantly expedite this process, particularly given that the Biden administration had already initiated reclassification proceedings, with the Department of Health and Human Services recommending in 2023 that marijuana be reclassified as a Schedule III drug.
Market Impact and Stock Performance
The cannabis sector has experienced significant volatility following Trump’s announcements. While specific “42% overnight” gains mentioned in initial reports reflect the speculative nature of cannabis investments, the broader market implications are substantial.
Current Market Dynamics
The U.S. cannabis market was estimated at USD 38.50 billion in 2024 and is expected to grow at a CAGR of 11.51% from 2025 to 2030, reaching the projected $63+ billion industry size. Global marijuana industry revenue in 2025 is expected to reach around $68.5 billion, according to Statista.
Leading Cannabis Stocks
Top-performing companies in the sector include:
Multi-State Operators (MSOs):
- Green Thumb Industries: Market cap: US$1.36 billion, with over 100 dispensaries across 14 states
- Cresco Labs: Major branded cannabis products portfolio
- Verano Holdings: Leading multi-state cannabis operator
Cannabis Real Estate Investment Trusts (REITs):
- Innovative Industrial Properties (IIP): Owns more than 100 properties in 19 states, organized as a REIT returning at least 90% of taxable income to shareholders
Commercial Real Estate Revolution
The potential reclassification represents a watershed moment for commercial real estate in the cannabis sector. Current federal restrictions have created a complex financing landscape that reclassification could dramatically simplify.
Current Financing Challenges
The cannabis industry is growing strong, but the land and buildings you need to grow, cultivate, package and dispense cannabis is expensive and bank’s won’t provide the financing. Current options are limited to:
- Private Lenders: Rates starting at 8% with limited terms
- Credit Unions: Short-term financing, often capped at 3 years
- Hard Money Lenders: High-cost, asset-based financing
- Alternative Financing: Hedge funds and private investors
Post-Reclassification Opportunities
Schedule III reclassification would unlock several key benefits for commercial real estate:
Traditional Banking Access: Federal income tax deductions for business expenses aren’t available to enterprises involved in “trafficking” any Schedule I or II drug. Changing marijuana to a Schedule III drug could mean significant tax savings for businesses licensed to sell marijuana in states where it is legal.
Lower Interest Rates: Access to conventional commercial real estate financing at competitive rates, potentially reducing borrowing costs by 3-5 percentage points.
Longer Terms: Traditional 20-30 year commercial mortgages instead of current 3-7 year private financing options.
Institutional Investment: Rescheduling could be a big step toward allowing the interstate trade of cannabis and would allow cannabis companies to deduct business expenses on their taxes, which would particularly help dispensaries that typically operate on very tight margins.
Banking and Financing Transformation
The banking sector’s relationship with cannabis has been one of the industry’s biggest constraints. First Citizens Bank is among the pioneers offering cannabis-friendly banking, with “business credit cards and flexible owner-occupied commercial real estate lending solutions” and “100% financing available for new and used equipment and machinery”.
Current Banking Landscape
Limited Options: Cannabis businesses are excluded from federal protections and resources available to traditional businesses, they cannot restructure under U.S. bankruptcy laws.
Higher Costs: Traditional commercial loans might offer loan-to-value (LTV) ratios of up to 80%, while cannabis loans often are capped at 60% LTV.
Compliance Burden: There is a $150 monthly compliance management fee associated with Hemp/CBD relationships.
Post-Reclassification Banking Benefits
- Expanded Banking Services: Full-service commercial banking relationships
- Conventional Lending: Access to SBA loans and traditional commercial financing
- Lower Compliance Costs: Reduced regulatory burden and associated fees
- International Banking: Cross-border transactions and international expansion funding
Investment Opportunities
The reclassification presents multiple investment vectors for commercial real estate professionals and investors:
Direct Real Estate Investment
Cultivation Facilities: Industrial properties with specialized HVAC and security systems Dispensary Locations: High-traffic retail spaces in compliant markets Processing Centers: Manufacturing and distribution facilities
Real Estate Investment Trusts (REITs)
Innovative Industrial Properties says it is the first publicly traded company on the New York Stock Exchange to provide real estate capital to the regulated cannabis industry. The company acquires cannabis real estate locations and then leases them back to cannabis operators.
Cannabis-Adjacent Investments
Equipment Financing: Hydroponic systems, security technology, testing equipment Ancillary Services: Legal, accounting, consulting, and technology services Supply Chain: Transportation, packaging, and logistics companies
Regulatory Timeline and Implications
Trump told reporters that it was early in the process but that he hoped to make a decision on the matter within the coming weeks. “We’re looking at reclassification and we’ll make a determination over the next — I would say over the next few weeks, and that determination hopefully will be the right one. It’s very complicated subject,” Trump said.
Implementation Timeline
Immediate (2-4 weeks): Presidential decision on reclassification support Short-term (3-6 months): DEA review and final determination Medium-term (6-12 months): Banking and tax law adjustments Long-term (1-2 years): Full market transformation and new financing options
State-by-State Impact
The federal change will have varying impacts depending on state regulations:
Mature Markets: California, Colorado, Washington will see immediate financing benefits Emerging Markets: New York, New Jersey, Virginia could accelerate development Medical-Only States: Potential expansion to adult-use markets Prohibition States: Continued restrictions despite federal changes
Challenges and Considerations
Despite the promising outlook, several challenges remain:
Market Saturation
According to cannabis market tracker BDSA, the US witnessed about $44 billion in illicit sales last year compared to around $31 billion in regulated sales, indicating continued black market competition.
Industry Profitability
A recent survey by Whitney Economics revealed that only 27.3% of cannabis operators nationwide are profitable, compared to 42% in 2022.
Debt Concerns
The biggest multi-state cannabis operators have as much as $6 billion in debt maturing next year, according to Whitney Economics, creating refinancing pressures.
Political Opposition
Prominent MAGA leaders are urging President Trump to back off his plans to review federal restrictions on marijuana, warning of a one-way ticket to societal ruin, indicating potential internal resistance.
Future Outlook
The cannabis industry transformation represents one of the most significant commercial real estate opportunities in decades. BDSA, a cannabis market intelligence firm, projects total legal sales this year in the U.S. of $33.58 billion, rising to $44.45 billion by 2029.
Key Growth Drivers
- Federal Banking Reform: The SAFER Banking Act could provide additional benefits
- Interstate Commerce: Potential for cross-state cannabis trade
- International Markets: Export opportunities and global expansion
- Medical Research: It also could make it easier to research marijuana, since it’s very difficult to conduct authorized clinical studies on Schedule I substances
Commercial Real Estate Implications
Property Values: Cannabis-suitable properties could see 20-40% value increases Rental Rates: Stabilization of rental markets as financing improves Development: New construction projects become financially viable Refinancing: Existing cannabis properties can access conventional financing
Call to Action: Partner with ElkPenn
The cannabis reclassification revolution is creating unprecedented opportunities in commercial real estate. As the industry transforms from a cash-heavy, restricted sector to a mainstream commercial enterprise, property owners, investors, and operators need experienced partners who understand both the opportunities and complexities ahead.
Why Choose ElkPenn for Your Cannabis Commercial Real Estate Needs?
Industry Expertise: Our team has tracked the cannabis real estate market through every regulatory shift, understanding both current constraints and future opportunities.
Financing Solutions: We maintain relationships with cannabis-friendly lenders and can help you navigate both current alternative financing and prepare for post-reclassification conventional options.
Market Intelligence: Access to real-time market data, regulatory updates, and investment opportunities across all cannabis-legal jurisdictions.
End-to-End Services: From site selection and due diligence to financing and property management, we provide comprehensive commercial real estate solutions.
Our Cannabis Real Estate Services Include:
- Property Acquisition: Identifying and securing prime cannabis real estate opportunities
- Financing Strategy: Connecting you with current cannabis lenders and preparing for traditional banking access
- Regulatory Compliance: Ensuring all properties meet state and local cannabis regulations
- Portfolio Management: Optimizing existing cannabis real estate holdings for maximum returns
- Development Projects: Managing ground-up cannabis facility construction and design
The Time to Act is Now
With reclassification potentially weeks away, the commercial real estate landscape is about to shift dramatically. Early movers who secure quality cannabis properties and establish relationships with experienced partners will be best positioned to capitalize on this historic opportunity.
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