Stock Market And A Potential Cannabis Collapse
As economists overwhelmingly question the Trump Administration’s tariff policy, one has to wonder if there is a deeper strategy behind his seemingly chaotic moves?
While President Trump’s recent push for sweeping tariffs and saber-rattling on global trade might look like bluster or protectionism on the surface, there’s a theory that it’s something far more calculated—a deliberate market destabilization that could further benefit the wealthy and consolidate power.
Crashing the market to buy it cheap
Here’s how the theory goes: by pushing policies that trigger investor fear—such as unpredictable tariffs, fiscal brinkmanship, or policy paralysis—President Trump could be intentionally rattling the markets. That fear, and related administrative actions (i.e. erratic tariffs) are causing stock prices to fall. And when that happens, those with excess cash, hedge funds, and other market players are ready to swoop in and buy assets at fire-sale prices.
It’s capitalism’s version of disaster profiteering. And if you have the liquidity to play the game, there’s massive upside. The losers? Everyday investors, 401(k)s, small business owners, and workers.
But this tactic isn’t new. It echoes strategies used by private equity firms for years: break the system, buy the pieces, and rebuild it in your image—with greater control and profit.
Nowhere might disaster profiteering end up being more devastating—or more opportunistic—than in the cannabis industry.
The cannabis crash waiting to happen
The U.S. cannabis sector has long been caught in limbo: legal in most states, but still a Schedule I substance federally. That classification means cannabis businesses are blocked from traditional banking, prevented from listing on U.S. stock exchanges, burdened by Section 280E tax rules, and viewed as risky by institutional investors.
While the FDA has recommended moving cannabis to Schedule III, and the DEA has been reviewing that recommendation for months, the process is currently stalled. Many expected movements in 2024—but the delay has stretched into 2025 and it appears likely to extend into 2026.
So, what happens if cannabis is not moved into Schedule III soon?
Massive defaults
Many cannabis companies—especially multi-state operators (MSOs)—have massive debt maturing between now and the end of 2026. As much as $3 billion in debt will come due for major U.S. Cannabis operators by the end of 2026. We are already seeing some if this play out:
- MSO Schwazee missed a $700,000 payment due March 3rd, defaulting on its already restructured debt.
- TILT Holdings received a default notice on April 3rd, claiming outstanding rental payments and other financial obligations amounting to over $4 million.
- Gold Flora, one of California’s largest operators, announced on April 1st, that it plans to liquidate assets after mounting financial losses and operational challenges.
Most debt-strapped cannabis companies are banking (pun intended) their survival on cannabis moving into schedule III. Such a move would provide relief from 280E and immediately increase a cannabis operator’s bottom line. Improved margins could provide cannabis companies the ability to cover debt payments, seek new investors, and restructure current debt. But if the DEA fails to act, and soon, leaving 280E in place, a wave of insolvencies could follow.
Disaster for current operators, but an opportunity for savvy investors.
Distressed cannabis assets: an opportunity for some
If rescheduling is materially delayed—or worse, outright denied—the fallout would create a flood of distressed cannabis assets. Licenses, equipment, inventory, intellectual property, and operating entities could go up for sale at a fraction of their former value. And state regulators would need to aid facilitation in such sales and transfers. Otherwise, they risk these assets (mainly marijuana inventory) flooding the black market.
So who benefits?
Not the pioneers who took the risks entering the state-legal market. Not the social equity mom-and-pop shops trying to compete with well-capitalized players. Instead, it will likely be private equity firms and wealthy individuals looking to consolidate power in one of the fastest-growing industries in America.
Marijuana will be federally legalized at some point. So, if you can buy current operations for pennies on the dollar, waiting out 280E won’t be as burdensome as it is for current debt-strapped operators. The risks associated with cannabis could further be hedged by those who also capitalize on the stock market instability.
Looking ahead: chaos or opportunity?
Whether or not these unfolding scenarios are the result of deliberate strategy, one thing is clear: the cannabis industry is on the brink of a major shake-up. For some, this could mean painful exits, loan defaults, or restructuring. For others, it may represent the buying opportunity of a lifetime.
If you’re a cannabis operator facing mounting debt, stalled growth, or an uncertain future due to the rescheduling delay, you’re not alone—and there are still paths forward. From asset sales and strategic partnerships to financial restructuring, there are ways to exit gracefully or reposition for the next wave.
On the flip side, if you’re an investor, fund, or entrepreneur looking to acquire distressed assets, build a portfolio, or position yourself for the post-rescheduling boom, now is the time to start identifying deals and creating strategic entry points.
We’re here to help both sides of the equation—those who need a lifeline, and those who see the opportunity on the horizon.
Let’s connect. Whether you’re ready to sell, restructure, or invest, we can help you navigate the next chapter of cannabis. Reach out today, and let’s talk strategy.
Source: Canna Law Blog
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