Author: slightbourne@noblecapitalmarkets.com

The U.S. cannabis sector is heading into a potentially transformative moment as reports surface that President Donald Trump is preparing to push for a reclassification of marijuana from a Schedule I drug to Schedule III. While no final decision has been made, the conversations happening between top administration officials and industry leaders signal a serious shift in federal posture—one that could reshape the economics, legal landscape, and competitive structure of the cannabis industry. For small-cap companies operating in or around this space, the impact could be particularly significant.

Cannabis has long been stuck at the federal level in a category reserved for substances with no accepted medical use, a classification that has held back the industry for decades. Reclassifying it to Schedule III would not legalize cannabis federally, but it would meaningfully reduce the restrictions companies face. The most immediate change would be relief from Section 280E of the tax code, which currently prevents cannabis operators from deducting ordinary business expenses. Larger players with substantial revenues would feel this impact first—but small-cap companies stand to benefit disproportionately because the tax burden has historically crushed their margins and limited their ability to reinvest.

A shift to Schedule III could also open the door to greater access to banking services, institutional capital, insurance products, and credit facilities. These are areas where small-cap operators—cultivators, distributors, multi-state operators, ancillary service providers, and biotech firms researching cannabinoids—have been at a disadvantage compared with more capitalized competitors. If traditional lenders and investors begin viewing cannabis as a legitimate medical or commercial sector rather than a high-risk legal minefield, the funding gap could narrow. That alone could reshape the competitive landscape, giving innovative but undercapitalized players a fighting chance to scale.

Public small-cap cannabis stocks are already reacting. Shares across the sector surged following the news, reflecting expectations that regulatory reform would unlock new revenue opportunities and ease long-standing financial pressures. But beyond the rally, the structural implications matter more. With reclassification, companies may finally be able to reduce compliance costs, expand into new states, and invest more aggressively in product development. Small-cap players focused on medical cannabis, CBD therapeutics, agricultural technology, and retail operations could all find themselves in a stronger position.

Of course, the path forward is not guaranteed. The reclassification process requires regulatory rulemaking and could face legal challenges, political resistance, and bureaucratic delays. The mixed landscape of state laws adds another layer of complexity that will not immediately disappear. And federal rescheduling alone does not address interstate commerce restrictions or full legalization—two changes that would unlock the broadest economic benefits.

Still, even a modest shift at the federal level can materially change market dynamics. The cannabis industry has operated for years under a patchwork of conflicting rules that increase costs and protect incumbents. Any move that reduces uncertainty—even if incremental—creates an environment where smaller, nimble companies can innovate, expand, and compete more effectively.

For small-cap investors, this moment is worth watching closely. Policy changes of this scale tend to create inefficiencies and valuation gaps, especially in sectors where regulation has held back growth. While volatility is likely as the political process unfolds, the prospect of lower taxes, reduced compliance friction, and increased access to capital could mark the beginning of a new cycle for cannabis-related equities.

The Federal Reserve’s December policy meeting delivered a third consecutive quarter-point rate cut, bringing the federal funds rate down to a 3.5%–3.75% range. But the decision was far from unanimous. In fact, the meeting produced the highest number of dissents in more than six years, with Chicago Fed President Austan Goolsbee, Kansas City Fed President Jeff Schmid, and Fed Governor Stephen Miran all breaking from the majority. Their reasons shed light on why the central bank remains cautious—and why some policymakers believe the Fed should have waited before easing further.

At the core of the dissent is a simple theme: uncertainty. Goolsbee and Schmid both argued that the Fed lacks enough recent data to justify another cut. With government reporting disrupted and key inflation releases delayed, the policymakers said they were uncomfortable lowering rates again without a clearer picture of how prices and demand are evolving. Goolsbee stressed that waiting until early 2026 for updated data would not have introduced meaningful economic risk, but it would have allowed the Fed to make a more informed call. In his view, patience was the more prudent option.

Both Goolsbee and Schmid pointed to inflation as the most compelling reason to pause. After moving sharply lower in 2023, progress on inflation has stalled for several months. Businesses across multiple sectors continue to cite rising input costs, and consumer surveys show persistent unease about prices. Schmid went further, warning that inflation is still “too hot” and that the economy’s ongoing momentum suggests current policy may not be restrictive enough. He raised the concern that households and firms could begin incorporating inflation into their everyday decision-making—a trend that historically makes inflation harder to bring down.

Goolsbee acknowledged that some price pressures appear tied to tariffs and may prove temporary, but he also highlighted risks that inflation in services could remain sticky. With the labor market cooling gradually rather than sharply, he argued there is no urgent economic threat that requires cutting rates before more evidence arrives. Hiring and firing activity has slowed into what he described as a “low hiring/low firing” environment—typical of businesses navigating uncertainty rather than signaling any dramatic downturn.

Fed Governor Stephen Miran dissented for a different reason, preferring a larger 0.50% cut. His stance reflects the broader tension within the central bank: some officials fear easing too slowly risks stalling momentum, while others worry easing too quickly risks reigniting inflation. The result is a policy landscape where the Fed is attempting to balance growth risks against inflation risks in real time, with incomplete information.

Still, the majority of the committee moved forward with the cut, signaling confidence that inflation will eventually resume its downward trend. But the dissents highlight that key voices inside the central bank are urging caution. For investors, the takeaway is straightforward: the Fed is not unanimously convinced that the inflation battle is over, and future rate moves may be more contested than markets expect.

Thursday, December 11, 2025

Michael Kupinski, Director of Research, Equity Research Analyst, Digital, Media & Technology , Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

NobleCon21. On December 3rd, the company presented at NobleCon21 at Florida Atlantic University (FAU) in Boca Raton, Florida. The presentation was conducted by Mark Goldston, Executive Chairman, Carl Daikeler, Co-founder and CEO, and Brad Ramberg, CFO. The team highlighted its favorable digital fitness and nutrition businesses and the successful completion of a multi-year operational turnaround. A replay of the presentation can be viewed here.

Digital. The digital fitness segment is supported by 900,000 subscribers and roughly 140 programs, with over 10,000 hours of content. This segment provides predictable recurring revenue, with gross margins in the high 80% range, efficient customer acquisition, and cross-selling leverage as the company expands into retail distribution and repositions its nutrition business.

Get the Full Report

Equity Research is available at no cost to Registered users of Channelchek. Not a Member? Click ‘Join’ to join the Channelchek Community. There is no cost to register, and we never collect credit card information.

This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision.