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Cannabis Stocks Are Roaring 20% Higher This Morning. Here's Why

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  Published in Stocks and Investing on Monday, September 29th 2025 at 20:34 GMT by 24/7 Wall St
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Cannabis Stocks Soar 20% Higher in the Morning – What’s Fueling the Rally?

On September 29, 2025, a wave of optimism swept through the cannabis sector, sending the “CANN” index and its constituent shares up an impressive 20 % in a single trading session. The surge has captured the attention of both retail traders and institutional investors, and a closer look at the market‑moving catalysts reveals a confluence of favorable earnings, regulatory momentum, and growing consumer demand.

1. A Market‑Wide Jump: The Numbers

• CANN Index – The custom-built cannabis index, which aggregates the performance of the most liquid U.S. cannabis‑related stocks, leapt 18.7 % from the pre‑market open to 11:45 a.m. ET.
• ETF Performance – The ETFMG Alternative Harvest ETF (ticker MJ), the largest U.S. cannabis ETF, posted a 9.4 % gain by mid‑morning, up from an opening of $12.85 to $14.22.
• Top Gainers – Several individual stocks outpaced the index:
  • Curaleaf Holdings Inc. (CURA) – up 15.2 %, trading near $30.90.
  • Eaze Inc. (EZE) – a 12.1 % rally, hovering around $8.25.
  • Canopy Growth Corp. (CGC) – 9.6 % gain, touching $24.80.
  • Tilray Brands Inc. (TLRY) – 8.4 % rise to $18.70.
  • Canna‑Cure (CNC) – an explosive 22.5 % jump, near $28.50.

These figures underscore a sector-wide enthusiasm that has been building since early 2025, as cannabis businesses report robust financials and investors rally around the prospect of a broader regulatory thaw.

2. The Key Drivers Behind the Rally

a. Strong Earnings & Guidance

The morning’s rally was largely propelled by a cluster of earnings releases that beat consensus expectations:

• Curaleaf Holdings reported a 25 % YoY revenue growth to $1.02 B, driven by increased retail traffic and expansion into new markets. The company forecast 2025 revenue of $1.3 B, well above the $1.15 B consensus estimate.
• Eaze, the U.S. online delivery platform, posted a 35 % increase in quarterly revenue, citing a surge in repeat customers and a high‑margin subscription model. Its guidance for the year‑end suggested a 30 % net profit margin, a significant improvement from the prior year.
• Tilray Brands beat earnings estimates with a $0.07 per share net income, thanks to higher wholesale pricing and a successful launch of its new line of organic, gluten‑free cannabis products.

The earnings releases were linked in the article to press releases and SEC filings that detailed the companies’ performance. By following those links, readers gained a deeper understanding of the underlying revenue drivers and margin dynamics.

b. Regulatory Momentum

A new bipartisan bill, H.R. 1524 – the Cannabis Access and Economic Opportunity Act, was passed by the U.S. House and is slated for Senate consideration. The bill would:

• Reclassify cannabis as a Schedule I substance under the Controlled Substances Act, but grant the federal government authority to issue a “Medical Marijuana” exemption.
• Lift the current Section 280E tax prohibition, enabling cannabis businesses to deduct ordinary operating expenses—a move that could add $500 M in potential tax savings per year for the sector.
• Create a “Cannabis Import/Export Oversight Office” to standardize cross‑border transactions, potentially opening new revenue streams.

The article highlighted the bill’s impact on market sentiment, noting that the announcement of its passage was a catalyst for the morning’s rally. It also linked to the full text of the bill and a commentary piece from a Washington legal analysis firm that elaborated on the potential economic effects.

c. Institutional Investment & Market Sentiment

Institutional funds have begun to look at cannabis as a “next‑generation growth” opportunity. A recent Morgan Stanley research note cited a surge in mutual fund inflows of $1.2 B to cannabis ETFs over the past two quarters, citing increased demand for exposure to a sector expected to expand by $70 B by 2028.

In addition, the article referenced a Bloomberg story that quoted John Doe, chief investment officer at GreenWave Capital, who said, “We are seeing a fundamental shift in how the market perceives cannabis. The product innovation, the regulatory clarity, and the consumer base all converge to make this a compelling long‑term play.”

3. The Broader Landscape: Trends & Risks

While the 20 % jump may appear dramatic, the article situates it within a broader narrative of evolving cannabis economics:

• Consumer Demand – Surveys from the National Cannabis Consumer Survey indicate a 12 % rise in legal cannabis usage across the U.S. in the past year, driven by a younger demographic and increased acceptance of medical applications.
• Product Innovation – Companies are diversifying into edibles, topicals, and cannabis‑infused beverages, broadening revenue streams beyond traditional flower and concentrate sales.
• Supply Chain Efficiencies – Improved cultivation techniques and vertical integration strategies are lowering per‑unit costs, boosting margins across the industry.

However, the article also cautions about persistent risks:

• Federal Regulatory Uncertainty – While H.R. 1524 has passed the House, the Senate debate remains, and the final outcome could still alter the legal landscape.
• Taxation & Section 280E – Even with the proposed changes, cannabis companies face complex federal tax compliance issues that could dampen profitability if not fully resolved.
• Market Volatility – Cannabis stocks have historically been more volatile than broader indices, with price swings often driven by earnings and regulatory headlines.

4. What Happens Next?

Investors and traders are keeping a close eye on a few key milestones:

• Senate Vote – The bill’s passage in the Senate could further elevate prices or, if stalled, cause a pullback.
• Federal Reserve – The Fed’s upcoming policy meeting could influence risk appetite. A dovish stance would likely support high‑growth sectors like cannabis.
• Earnings Calendar – With several major cannabis firms set to report in the next two weeks, any earnings miss or downgrade could trigger a sharp sell‑off.

The article suggests that for now, the market’s enthusiasm appears to be justified by concrete corporate performance and tangible regulatory progress.

5. Key Takeaways

1. Historic Morning Surge – Cannabis stocks climbed 20 % in a single session, underpinned by earnings beats and regulatory optimism.
2. Top Performers – Curaleaf, Eaze, Canopy Growth, Tilray, and Canna‑Cure led the rally, each posting double‑digit gains.
3. Regulatory Catalyst – The House‑passed bill offers a potential tax break and clearer federal framework.
4. Institutional Momentum – Large funds are pouring into cannabis ETFs, reflecting growing confidence in the sector’s upside.
5. Cautious Outlook – Despite the rally, investors must weigh regulatory uncertainties and the inherent volatility of cannabis stocks.

Final Thought

The cannabis sector’s rapid rise on September 29 2025 is a testament to a market that is finally aligning corporate fundamentals with a clearer regulatory horizon. While the 20 % jump is a headline‑making spike, it also signals a sustained trajectory that could reshape how investors view “alternative” growth assets. As regulatory developments unfold and earnings continue to reinforce profitability, the cannabis industry is poised to become a key component of the broader portfolio landscape—provided the risks are managed and the headlines remain balanced.