Cannabis Investor Sentiment Softens As Institutional Confidence Wanes, Survey Shows

Cannabis investors should take note that investor sentiment in the industry has shifted from bullish to neutral, according to the latest ATB Cannabis Investor Sentiment Survey.

The report, based on responses from institutional investors, reveals that only 31.8% of investors remain optimistic about the multi-state operator (MSO) sector, a sharp drop from the 83.3% recorded six months ago.

The primary reason for this change is the delay in uplistings to major U.S. exchanges, and also in moving cannabis to Schedule III. As a result of shifting expectations, just 9.1% of respondents reported increasing their exposure to the MSO sector in the past six months, compared to 61.1% in the spring of 2024.

Cannabis Investor Sentiment Turns Neutral

Uplisting to U.S. exchanges remains the top priority for 59.1% of investors, down from 73.7% six months ago, signaling some hesitation. Rescheduling to Schedule III ranks second, with 31.8% of investors citing it as a major driver for future investments.

But, despite the noticeable decline among bulls, the sentiment has not fully transitioned to pessimism. In fact, the survey highlights a more neutral stance as investors adopt a wait-and-see approach.

Key catalyst, such as rescheduling cannabis and uplisting companies to NASDAQ and NYSE, might reignite investor interest and turn the tide for cannabis industry leaders.

“Investors are holding back due to the delays in these key developments,” states the report, shared via an email to Benzinga Cannabis.

Read Also: Investor Confidence In Cannabis Is ‘Amped Up’ As VCs And Private Equity Firms Shift Perception, Expert Says

Florida Legalization And Canadian Market Challenges

Some pessimism might also be affecting newer markets.

The survey also found that Florida's cannabis legalization prospects have dimmed slightly, with investors assigning a 62% probability for adult-use legalization, down from 69% in the previous survey. This decline contrasts with expectations, as recent political discussions suggested growing support for legalization.

Despite the setback, many believe that the Florida market could still present opportunities in the coming years.

Meanwhile, the sentiment towards the Canadian cannabis market has worsened significantly.

In the survey, 39% of respondents reported becoming more bearish on Canadian companies, up from 29% six months ago. Failed excise tax reform and the inability to access the U.S. cannabis market have contributed to this negative outlook. Investors highlighted that without regulatory changes, Canadian cannabis companies are struggling to gain momentum.

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A Rebound For Investors Might Come

Although the current sentiment is neutral, some cannabis investors are optimistic about the potential for a rebound if these long-awaited changes materialize.

Should rescheduling occur, 53.3% of respondents believe that the AdvisorShares Pure US Cannabis ETF MSOS could rise above $20, a substantial increase from its current level of $6.86.

At the same time, a majority of respondents (59.1%) see Tier 1 MSOs as undervalued, suggesting a buying opportunity for those with a long-term view.

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