illi News - Trump's Executive Order Rescheduling Cannabis: Accelerating M&A in a Multibillion-Dollar Industry

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Issued by Smoke Wallin, Managing Director at STS Capital Partners

NEW YORK - illiNews -- On December 18, 2025, U.S. President Donald Trump signed an executive order rescheduling marijuana from Schedule I to Schedule III under the federal Controlled Substances Act. This historic move formally recognizes cannabis's accepted medical use and lower potential for abuse, materially reducing federal risk for operators, investors, and strategic acquirers.

Beyond its symbolic significance, this regulatory shift arrives at a pivotal moment for an industry already experiencing rapid growth and increasing investor interest.

De-Risking a Rapidly Growing Market

This regulatory shift comes as the cannabis industry enters a growth phase. According to sources, the U.S. cannabis market was valued at approximately $38.5 billion in 2024 and is projected to grow at a compound annual rate of more than 11% through 2030, potentially exceeding $76 billion. Globally, the legal cannabis market could surpass $110 billion by 2030.

Rescheduling improves access to banking and institutional capital, alleviates Section 280E tax burdens, and strengthens EBITDA profiles. Together, these changes reduce friction that has historically constrained deal activity and creates the conditions for a sustained acceleration of mergers, acquisitions, and strategic partnerships.

Declining Alcohol and Tobacco Consumption Drives Strategic Interest

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At the same time, broader consumer behavior is reshaping adjacent industries. Declining alcohol and tobacco consumption is intensifying growth pressure on legacy sectors, pushing well-capitalized players to seek diversification opportunities.

U.S. drinking rates fell to 54% in 2025, while beverage alcohol sales declined 3% year-over-year in the first half of 2025 to $53 billion. Cigarette sales dropped approximately 8% in 2023, with adult smoking rates reaching just 11% in 2024. These trends leave major alcohol, tobacco, and consumer packaged goods companies with significant capital, underutilized distribution networks, and an urgent need for new growth vectors – making cannabis an increasingly attractive strategic target. These companies are now increasingly pursuing cannabis M&A to achieve scale and access new markets.

Medical Recognition Strengthens Long-Term Demand

The executive order also aligns federal policy with decades of clinical research demonstrating cannabis's therapeutic benefits. Evidence supports its efficacy in treating chronic pain, epilepsy, chemotherapy-induced nausea, multiple sclerosis spasticity, sleep disorders, PTSD, anxiety, and depression.

This formal recognition further legitimizes the industry, expanding the universe of strategic and financial buyers willing to engage. As regulatory risk declines and medical credibility increases, cannabis transitions from a speculative category to a viable arena for structured, large-scale M&A.

Broader CPG Sector Pressures: Stagnant Growth Drives the Hunt for New Opportunities

The impact extends beyond marijuana to the closely related hemp and CBD markets. The global CBD market, largely hemp-driven, was valued at over $11 billion in 2024 and is projected to exceed $50 billion by 2033. The U.S. Hemp Roundtable praised the order, emphasizing provisions that preserve access to full-spectrum CBD products and potential Medicare coverage, signaling broader opportunities for acquisitions and portfolio expansion.

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A Defining M&A Moment for Cannabis and Those Prepared to Lead It

Improved banking access, regulatory clarity, tax relief, and capital inflows are converging to create one of the most consequential periods in cannabis and hemp M&A history. The industry remains fragmented, and scale, operational depth, and strategic positioning are becoming critical determinants of long-term success.

"Whether you are a buyer looking to consolidate, a seller seeking an exit at peak value, or an operator aiming to build a national platform, this period presents a meaningful opportunity to position yourself advantageously – though conditions are unlikely to remain static. Working with experienced advisors who understand the unique dynamics of the cannabis and hemp sectors, such as STS Capital Partners, will place you in the strongest possible position to identify, structure, and execute the right transactions." – Smoke Wallin, STS Managing Director.

For corporations, investors, and industry participants on the sidelines, the message is clear: the risks have materially decreased, and the rewards in this rapidly expanding market are now within reach. The time to act is now.

About STS Capital Partners:

STS Capital Partners is a global sell-side M&A firm. We are expert guides for private, founder, and entrepreneurial business owners on the journey to achieving an Extraordinary Exit™. Our extensive global relationships, world-class team, and proven deal process bring international strategic buyers and investors to the table who deliver maximum financial value. As a result, we help clients fulfill bigger ambitions in life and leave lasting legacies by inspiring charitable donations through our Success to Significance™ program with a goal of raising billions of dollars in new philanthropic and impact capital to support charities like Altruvest, Knowledge Impact Network, and DignityMoves.