Cannabis Stock VRNO Rises 40% in a Year: Time to Buy, Sell or Hold?

Shares of Verano Holdings Corporation VRNO have staged a strong recovery over the past year. The U.S.-based cannabis operator’s stock has risen a little over 40% in this time frame, significantly outperforming the industry, as shown in the chart below.

The upside can be largely attributed to renewed optimism around federal marijuana reform in the United States. In August 2025, favorable comments from President Trump about the potential rescheduling of marijuana triggered a sharp rally across several U.S.-listed cannabis stocks, including Verano. Momentum strengthened further in December when President Trump signed an executive order directing federal agencies to move forward with the rescheduling of marijuana at the federal level.

This rally has investors questioning whether to buy, hold or sell. Let’s explore the company’s fundamentals to better understand how to approach the stock.

Marijuana Reclassification Marks a Positive Regulatory Shift for VRNO

The executive order directs federal agencies to expedite the reclassification of marijuana from Schedule I to Schedule III under the Controlled Substances Act. This move formally acknowledges the medical value of cannabis at the federal level and represents one of the most meaningful regulatory developments for the U.S. cannabis industry in years.

For operators like Verano, rescheduling holds the potential to materially improve long-term profitability. Most notably, it could eliminate the application of IRS Code 280E, which currently prevents cannabis companies from deducting ordinary business expenses and significantly inflates effective tax rates. Any relief on this front would improve net income visibility and cash flow generation over time.

Reclassification may also support broader medical research efforts and enhance the legitimacy of cannabis-based therapies, potentially expanding adoption within regulated healthcare channels. These developments could benefit scaled, profitable operators with established consumer packaged goods (CPG) and medical portfolios, including Verano.

That said, the executive order does not outline a specific implementation timeline or address federal legalization of adult-use cannabis. While these limitations introduce some uncertainty, the directive signals a clear shift in federal policy and marks an important step toward longer-term regulatory normalization for the industry.

VRNO’s Sales Growth Faces Domestic Headwinds

Verano operates a vertically integrated model, cultivating, processing and selling cannabis through its own retail and wholesale channels. As the company derives all its revenues from the U.S. market, persistent price compression, competitive intensity and uneven regulatory progress have weighed on top-line performance.

In the first nine months of 2025, retail sales were up 1% year over year to $502.4 million, driven primarily by product availability in the Florida market. This growth was partially offset by targeted promotional activities and discounting strategies in retail stores. Meanwhile, wholesale revenues declined about 13% year over year to $234.9 million, owing to the company’s accounts receivable strategy, which kept several accounts on hold due to non-payment, as well as continued pricing pressures.

Margin performance also reflected these market conditions. Gross margin contracted approximately 100 basis points to 50%, driven by promotional activity in retail stores and price compression in the wholesale segments. However, Verano’s disciplined focus on operating efficiency supported cost performance. Selling, general and administrative (SG&A) expenses declined 7% year over year to $251.5 million, driven by a decrease in amortization and depreciation costs, combined with the company’s ongoing optimization efforts.

Despite the headwinds, Verano maintained an optimistic tone for the fourth quarter and beyond. This was backed by the company’s continued emphasis on operational efficiencies, retail expansion and product innovation (including a new vape system) as foundational to longer-term momentum. As part of its long-term positioning, Verano recently completed its redomicile from British Columbia to Nevada, aligning its corporate structure with its U.S.-based operations. It believes that this move will enhance its acceptance in U.S. capital markets and also improve the marketability of its shares.

Stiff Competition in the Cannabis Space

Verano operates in an increasingly competitive U.S. cannabis market, where price compression and oversupply continue to weigh on operators. The company faces stiff competition from peers like Cresco Labs CRLBF and Tilray Brands TLRY, both of which are also pursuing similar expansion and cost-control initiatives.

Companies like Cresco and Tilray are also expanding their footprints internationally, including in markets like Europe. This international exposure gives them an edge over U.S.-focused players like Verano and Green Thumb Industries GTBIF, which remain fully dependent on an increasingly saturated and fragmented U.S. market.

Earnings Estimates

Loss estimates for 2025 and 2026 have widened over the past 60 days.

How to Play VRNO Stock

Verano’s focus on cost discipline and dispensary expansion is gradually strengthening its operational foundation. However, revenue headwinds and stiff competition pose near-term risks. President Trump’s executive order on marijuana rescheduling has revived optimism around cannabis stocks, but investors may prefer to wait for clearer signs before initiating or expanding positions.

Existing shareholders may consider maintaining exposure while monitoring this Zacks Rank #3 (Hold) company’s execution on its profitability roadmap.

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

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This article originally published on Zacks Investment Research (zacks.com).

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