2025 is shaping up to be a breakthrough year for the cannabis industry. After years of sluggish growth and battered stock prices, the sector is finally gaining traction, largely driven by support from the Trump administration. In the past couple of months, President Trump has spoken favorably about marijuana rescheduling, a move that sparked sharp rallies across several U.S.-listed cannabis operators.

Last Sunday, the President posted a video on his Truth Social platform praising the health benefits of cannabidiol (CBD) for older adults. The nearly three-minute video, produced by The Commonwealth Project, highlights CBD’s potential benefits for sleep, stress and pain management in seniors, while also advocating for its inclusion under Medicare coverage.

Although the video itself does not signal an immediate policy change, it adds fresh fuel to investor optimism regarding cannabis legalization — a topic that has long been stuck in regulatory deadlock. Any move to legalize marijuana at the federal level could help revive an industry that is expected to surpass the $160 billion mark by 2032. Investors have viewed these developments as a sign that cannabis reform, particularly in the medical segment, may finally gain political momentum.

Against this backdrop, we examine three companies — Village Farms International (VFF Quick QuoteVFF - Free Report) , Canopy Growth (CGC Quick QuoteCGC - Free Report) and Tilray Brands (TLRY Quick QuoteTLRY - Free Report) — that look poised to capitalize on the sector’s renewed momentum. We'll analyze why each of these companies, either carrying a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), is an interesting prospect to watch.

You can see the complete list of today’s Zacks #1 Rank stocks here.

Village Farms — Strategic Shifts Driving Momentum

Currently sporting a Zacks Rank #1, Village Farms has been carving out a strong position in the cannabis market through both strategic restructuring and international expansion. The company recently divested its fresh-produce business, allowing it to concentrate fully on higher-margin cannabis operations — a shift that has already started to pay off.

The company’s second-quarter international medical export sales surged 690% year over year, supported by new customer wins and deeper relationships with existing buyers. Village Farms also began commercial shipments to the Netherlands in early 2025, resulting in $2.4 million in incremental revenues.

Such strategic decisions have helped the company stand out as one of the few cannabis operators consistently generating positive EBITDA and cash flow from its cannabis operations. Village Farms noted that it has maintained its position as one of Canada’s top three cannabis companies, highlighting its ability to compete effectively in a crowded market.

Estimates for VFF’s 2025 EPS have improved from a loss of 9 cents to earnings of 12 cents in the past 60 days. During the same time frame, EPS estimates for 2026 have risen from 6 cents to 14 cents. The stock has skyrocketed 267% year to date.

CGC Eyes Success With Cost Cuts, Awaits U.S. Breakthrough

With a Zacks Rank #2, Canopy Growth has been cleaning up its balance sheet through disciplined capital allocation and cost management. The company has been stepping back from low-margin lines of business, paying off debts, and divesting non-core assets. These actions have reduced operating costs and improved liquidity, providing management with greater flexibility to pursue growth opportunities.

Canopy Growth’s long-term story also hinges on its U.S. ambitions. Through Canopy USA, the company maintains interests in Acreage Holdings, Wana Brands and Jetty Extracts — a portfolio that secures a foothold in both recreational and medical cannabis markets in the country. If federal rescheduling materializes, these assets could be marketed more aggressively, providing a meaningful boost to revenue potential.

Estimates for CGC’s 2025 loss per share have narrowed from 60 cents to 50 cents in the past 60 days. During the same time frame, loss per share estimates have improved from 44 cents to 11 cents. Although the stock fell 50% year to date, signs of top and bottom-line improvements should reassure investors about its growth prospects.

From Pot to Pints: Tilray’s Bold Diversification Push

One of the first cannabis stocks to list on a U.S. exchange, this Zacks Rank #3 company has been broadening its international operations. The company has been expanding its presence in Germany and Italy through new product launches and strategic partnerships, enhancing the availability of its medical cannabis products.

However, with Canada’s cannabis market slowing and U.S. federal legalization still uncertain, Tilray has diversified beyond its core cannabis business. Over the past few years, it has acquired more than a dozen beer and spirits brands, including partnerships with Anheuser-Busch and Molson Coors, making it one of the largest craft brewers in the United States. The company has also moved into the hemp-based THC beverage space, selling under brands like Liquid Love and Happy Flower across multiple U.S. states. These efforts have helped TLRY offset volatility in its core cannabis segment.

In the past 60 days, estimates for Tilray’s fiscal 2026 (year ending May 2026) and fiscal 2027 have remained unchanged at 11 cents and 7 cents, respectively. Shares of the company have risen 21% during the period.