MSOS Cannabis ETF Extends Rally on Regulatory and Political Tailwinds

The AdvisorShares Pure US Cannabis ETF (MSOS) is demonstrating continued strength, building on recent gains as favorable developments in the regulatory and political landscape buoy the cannabis sector. The ETF has surged 14.58% over the past five trading sessions, bringing its year-to-date (YTD) performance to an impressive 34.8%.

The most significant catalyst for this rally is the proposed reclassification of marijuana by the U.S. Department of Health and Human Services (HHS) from a Schedule I to a Schedule III substance under the Controlled Substances Act, projected for August 2025. This reclassification acknowledges the medical applications of cannabis and could alleviate the onerous tax burden faced by cannabis businesses by exempting them from Section 280E of the U.S. federal tax code.

Investor sentiment, as indicated by options trading activity, reveals a bullish outlook. On August 27, MSOS experienced an 89% surge in call option volume relative to its typical daily volume, suggesting heightened expectations for further price appreciation. Further validating this positive sentiment, institutional investment has also increased. Barclays PLC increased its holdings in MSOS by 69.9% in the third quarter of 2025, signalling increased confidence among institutional investors in the cannabis sector's future.

Political endorsements have further amplified the positive momentum. Former President Donald Trump's late September 2025 remarks highlighting the potential healthcare benefits of cannabis for seniors led to a notable surge in cannabis stocks, perceived as a positive signal for the industry's prospects.

The MSOS ETF's rally reflects regulatory reform, increasing institutional investment, and political support. The market's cautious optimism suggests that while the outlook is positive, investors remain mindful of the potential risks and uncertainties in the evolving cannabis industry landscape, meaning future price action will be closely linked to further regulatory developments.