Cannabis Business

July 19, 2026

# Cannabis Industry Posts Profitable Q1 2026 as Federal Rescheduling Unlocks Tax Relief

The cannabis industry's largest operators reported their strongest quarterly earnings in years during the first quarter of 2026, marking the first reporting season where federal tax relief from Schedule III rescheduling reshaped the fundamental economics of doing business. Trulieve Cannabis reported $287 million in revenue with a 59% gross margin and $100 million in adjusted EBITDA at a 35% margin—margins that rival well-run consumer packaged goods companies. Curaleaf Holdings posted $324.2 million in revenue and swung to $70.1 million in net income from continuing operations, ending a multi-quarter losing streak that had defined the sector since 2023. 💰 MONEY MOVES The four largest MSOs by revenue collectively reported approximately $1.8 billion in Q1 2026 revenue, a 12% increase over the same period last year, as the 280E tax deduction prohibition that had crushed operator margins for six years finally lifted for state-licensed medical operations.

The catalyst was the Department of Justice and DEA Final Order signed on April 22, 2026, moving marijuana contained in FDA-approved drug products and marijuana subject to a state-issued medical license from Schedule I to Schedule III of the Controlled Substances Act. That single regulatory shift restored access to ordinary business deductions—wages, rent, marketing, depreciation—that had been barred under Internal Revenue Code Section 280E since the 1980s. The effective federal tax rate for cannabis operators had hovered in the 70-75% range because the IRS forced companies to pay federal income tax on gross profit rather than net income. 🚀 THIS IS COOL The Treasury Department announced on April 23 that the rescheduling applies for the full taxable year that includes the effective date, meaning 280E relief effectively applies from January 1, 2026 forward for qualifying medical operations, potentially dropping effective tax rates to the standard 21% corporate rate. Trulieve generated $56 million in cash flow from operations and $42 million in free cash flow during the quarter, ending with $353 million in cash on the balance sheet—cash that would have vanished into IRS payments under the old regime.

Trulieve's footprint anchors the company's advantage. It operates 240 retail dispensaries and over four million square feet of cultivation and processing capacity across the United States, making it the largest U.S. MSO by store count. The company has filed DEA registration applications for 206 of its state-licensed medical retail locations, positioning itself to scale operations as the federal framework clarifies. Curaleaf, which operates 164 dispensaries and 15 cultivation sites across 15 states, expanded internationally in the quarter, generating $47.2 million in revenue from Europe, Australasia, and North America—up 35 percent year-over-year. The company completed acquisition of German medical cannabis producer Four 20 Pharma and became the first cannabis company to secure registration for standardized cannabis preparations in Spain. Curaleaf also moved to the Toronto Venture Exchange in July 2026, a milestone reflecting growing market maturity and expanded hedging strategies available to institutional investors.

The earnings momentum triggered a remarkable equity rally. The AdvisorShares Pure US Cannabis ETF (MSOS) gained 11.2% in the five trading days ending June 6, 2026, marking its best weekly close since October 2025, with Curaleaf and Trulieve posting gains exceeding 15%. Green Thumb Industries advanced 12.8%. Trading volume across the top ten MSOs by market cap increased 47% week-over-week. The DEA confirmed on June 3 that the final rescheduling rule remains on track for Federal Register publication by August 2026, which would trigger IRC 280E relief for cannabis operators beginning in tax year 2027 and unlock an estimated $1.8 billion annually in excess federal tax liability relief across the sector. Several tier-one MSOs issued upward Q2 2026 revenue guidance during the first week of June—Curaleaf raised its Q2 forecast to $345-$355 million, and Green Thumb increased its Q2 EBITDA projection to $125-$130 million.

🤔 THINK ABOUT IT The U.S. legal cannabis market is projected to surpass $45 billion in annual revenue by 2026. For investors managing an estimated $15 billion in deployed cannabis capital, these earnings reports represent the single most important data source for understanding a $30 billion state-legal industry. Six years into federal prohibition, the companies that survived the "culling of the herd" through balanced expansion and disciplined unit economics are now generating the kind of profitability metrics that had seemed impossible under 280E tax treatment. The policy moment matters. Adult-use and recreational marijuana remain Schedule I, leaving 280E fully in effect for those operations and creating cost allocation complexity for dual-license MSOs. But for medical operators anchored in states like Florida, Pennsylvania, Massachusetts, Arizona, Illinois, and New Jersey, the rescheduling order has reset the table entirely—and the Q1 2026 earnings season is the first evidence that the reset is real.

July 19, 2026

Cannabis stocks are surging toward a regulatory watershed as investors price in a favorable outcome from the DEA's expedited rescheduling hearing, which concludes July 15. The AdvisorShares Pure US Cannabis ETF (MSOS) has delivered a 103.7 percent one-year return as of May 31—crushing the S&P 500's 29.8 percent gain—and has climbed to its highest 2026 levels with $1.13 billion in assets under management. 💰 MONEY MOVES This momentum accelerated after President Trump's December executive order directed the attorney general to move marijuana from Schedule I to Schedule III, a process that has already reshaped the sector's economics for medical operators and opened the door to major exchange listings for the largest multistate operators.

Trulieve Cannabis, which holds roughly 30 percent of MSOS's portfolio, began trading on the NYSE under ticker TRLV on June 10 after restructuring to isolate its medical cannabis operations—a historic milestone for the U.S. cannabis industry and a direct result of April's rescheduling of FDA-approved medical marijuana products to Schedule III. The company reported Q1 2026 revenue of $287 million with a 59 percent gross margin, GAAP net income of $2 million, and adjusted EBITDA of $100 million at a 35 percent margin. CEO Kim Rivers credited the Trump administration's reclassification action as enabling growth, and Alliance Global maintains a "Buy" rating with a C$27 price target on the company. Curaleaf Holdings, which operates the largest dispensary footprint among U.S. operators across more than 20 states, completed a 1-for-3 reverse split in early June to prepare for its own potential uplisting, and both companies posted profitable Q1 results as the first quarter fully benefiting from 280E tax relief unfolded.

🚀 THIS IS COOL The removal of Internal Revenue Code Section 280E has proven transformative: cannabis operators faced effective federal tax rates in the 70 to 75 percent range because the code disallowed ordinary business deductions like wages, rent, and depreciation. For state-licensed medical operators, those deductions are now available, potentially pushing effective rates closer to the standard 21 percent corporate rate. This change alone reshaped the sector's profit profile in ways that traditional Wall Street metrics had previously obscured. On the consumer side, industry data shows 47 percent of Americans have tried cannabis, 79 percent live in a county with at least one dispensary, and adult-use cannabis is now legal in 24 states—a stark contrast to the 4 percent who had tried it when Gallup first asked the question in 1969. The U.S. cannabis industry is expected to reach nearly $47 billion in 2026, with cannabis tax revenue already hitting $25 billion, nearly double that of alcohol.

The June 29 DEA hearing will examine whether broader marijuana products, including adult-use cannabis, should move to Schedule III, with the proceeding required to conclude by July 15. That binary outcome—success or regulatory setback—carries real stakes: if broader rescheduling succeeds, the tax burden on recreational operators would ease substantially and access to banking, capital, and institutional investment would expand across the entire sector. If it fails, adult-use operators remain locked in Schedule I territory with 280E still fully in effect, forcing cost allocation complexity for dual-license multistate operators. 🤔 THINK ABOUT IT The sector is already pricing in success before the hearing concludes—a market bet that regulatory momentum will break through—which means July 15 carries more downside risk than upside surprise from current price levels.

Across the broader industry, larger operators with access to capital are consolidating distressed assets and expanding state-by-state. Curaleaf, Green Thumb Industries, and Glass House Brands all posted Q1 profits, while consumer behavior continues shifting toward lower-dose edibles (42 percent of edible consumers prefer 10 mg or less) and smoke-free cannabis-infused beverages. Technology adoption is accelerating in extraction, cultivation, and logistics, positioning the sector for efficiency gains as scale stabilizes. 💰 MONEY MOVES Cannabis added approximately $149 billion to the economy in 2025 and supports 425,002 full-time equivalent jobs, making the sector's regulatory status not just a Wall Street question but an economic one affecting wages, tax revenue, and market access across North America.

July 19, 2026

Global cannabis market valuations are accelerating dramatically, with the industry projected to nearly double from $45.6 billion in 2025 to $79.3 billion by 2030, driven by expanding legal retail sales, cannabis-derived pharmaceuticals, and analytical extraction services. The market's fragmented competitive landscape—dominated by multi-state operators (MSOs) like Curaleaf, Trulieve, Green Thumb Industries, Verano, Cresco Labs, and Tilray Brands—is consolidating as larger players absorb smaller competitors and expand across state lines. 💰 MONEY MOVES Trulieve's 2021 acquisition of Harvest Health cemented its position as the largest U.S. cannabis operator by revenue, with the combined entity generating over $1.2 billion annually and posting superior profitability margins (39% adjusted EBITDA) compared to rival Curaleaf's 27%, demonstrating that scale and operational efficiency now separate market leaders from the middle tier.

Recent quarterly earnings reveal the industry's stabilization after years of losses. 💰 MONEY MOVES In Q1 2024, Curaleaf reported net revenue of $338.9 million with adjusted EBITDA of $76.7 million; Trulieve posted $298 million in revenue with adjusted EBITDA of $106 million; and Green Thumb Industries—the only major retailer to report an actual profit—generated $275.8 million in revenue with $90.5 million in adjusted EBITDA. Trulieve continues leveraging its Florida dominance, where it controls 52 percent of the dried flower market; the state's 2019 legalization of smokable cannabis products triggered a surge in patient registrations (reaching 181,000 by mid-2019) and product diversification that pushed the company to record quarterly revenues exceeding $57.9 million. Even as the industry matures and profitability improves, net losses persist across the sector—though Trulieve's losses fell 32 percent quarter-over-quarter in Q1 2024, from $37 million annually to $23 million currently.

The regulatory environment is reshaping investment dynamics. 🚀 THIS IS COOL Federal rescheduling of cannabis to Schedule III for medical applications in 2025 has reduced banking barriers for operators and positioned lending vehicles like AFC Gamma—a commercial mortgage REIT offering $10-100 million loans to state-licensed operators—to capitalize on reduced friction in the $57 billion U.S. market alone. Virginia's Democratic-controlled legislature passed bills to legalize adult-use cannabis sales in February 2025, with existing medical licensees able to transition to adult-use retail by November 2026 (under the House version) or January 2027 (Senate version) with one-time fees ranging from $5 million to $15 million. New York is exploring expanded retail access through proposed low-THC cannabis beverages in liquor stores, legislation filed this year by Senators Jeremy Cooney and Assemblymember John Zaccaro, Jr. to "expand legal access to regulated products and reduce illicit market activity."

Institutional investment vehicles have crystallized around sector consolidation. The AdvisorShares Pure US Cannabis ETF (YOLO)—featuring top holdings in Curaleaf and Green Thumb with a lean 0.76% expense ratio—benefits directly from Schedule III rescheduling and has positioned itself to capture growth in the $57 billion domestic market by tracking U.S.-focused cultivators and retailers. 💰 MONEY MOVES Curaleaf closed a $500 million debt offering at 11.5% interest rates, while Green Thumb secured an additional $50 million in senior debt financing, indicating that major operators are securing capital to fuel expansion despite persistent regulatory uncertainty at the federal level. Tilray Brands completed a strategic alliance with Canadian peer Hexo, with Tilray acquiring Hexo's convertible notes (valued between $160-170 million) and gaining 50 percent interest in Truss Beverages—a joint venture with Molson Coors' Canadian subsidiary planning to launch 15 new cannabis beverage flavors in 2022.

The consolidation math is straightforward: larger operators with superior EBITDA margins, multi-state footprints, and stable Florida anchors are acquiring regional players and extracting synergies through shared infrastructure and procurement leverage. 🤔 THINK ABOUT IT An industry projected to reach $79 billion globally by 2030—generating measurable corporate profits, tax revenue for states like Florida, and employment across cultivation, retail, and ancillary services—remains classified as Schedule I federally, meaning cannabis is officially designated as having no accepted medical use and high abuse potential, even as Schedule III classification for medical cannabis now exists and pharmaceutical companies develop cannabis-derived medications. The gap between federal policy and market reality suggests that institutional investors, state legislatures, and major corporations are already operating under an assumption of full normalization—they're just waiting for federal law to catch up to the ground they've already claimed.

July 18, 2026

# Cannabis Industry Posts Record Profitability as Schedule III Rescheduling Unlocks $280E Tax Relief

💰 MONEY MOVES The U.S. cannabis industry's largest multi-state operators reported their most profitable quarter on record in Q1 2026, with Trulieve posting $287 million in revenue and a 35% adjusted EBITDA margin, while Curaleaf generated $324.2 million in revenue and $70.1 million in net income. These results mark the first earnings season under Schedule III classification for state-licensed medical cannabis operators—a regulatory shift that fundamentally reshapes the economics of an industry that has operated under crippling federal tax penalties for more than six years. The Trump administration's April 2026 reclassification of medical marijuana removed Internal Revenue Code Section 280E, the provision that historically forced cannabis sellers to pay federal income tax on gross profit rather than net income, effectively pushing operators' tax rates into the 70-75% range. With 280E relief now applying to qualifying medical operations retroactively from January 1, 2026, those effective tax rates are collapsing toward the standard 21% corporate rate.

🚀 THIS IS COOL Trulieve's 59% gross margin and $100 million adjusted EBITDA represent performance metrics on par with well-managed consumer packaged goods companies—a meaningful step up from the high-40s margins that have historically defined the sector. The company generated $56 million in operating cash flow and $42 million in free cash flow during the quarter while ending the period with $353 million in cash on the balance sheet. Trulieve operates 240 retail dispensaries and more than four million square feet of cultivation and processing capacity across the United States, making it the largest U.S. MSO by store count, and has filed DEA registration applications for 206 of its state-licensed medical retail locations to capitalize on the rescheduling opportunity. CEO Kim Rivers credited the reclassification as enabling new growth pathways: "With 206 dispensaries and over 3.5 million square feet of production serving medical patients, Trulieve is well positioned to explore new opportunities enabled by rescheduling."

Curaleaf's international expansion is providing a structural revenue cushion against domestic market saturation. The company's Q1 2026 results showed international revenue reaching $47.2 million, up 35% year-over-year, now accounting for roughly 15% of total revenue—a higher international mix than any U.S. peer. The company secured registration for standardized cannabis preparations in Spain in July 2026 and completed its acquisition of German medical cannabis producer Four 20 Pharma during the quarter, consolidating its European platform at a time when Germany's medical cannabis market is the single fastest-growing legal cannabis market globally. While Curaleaf's domestic gross margin compressed 220 basis points year-over-year to 49%, management attributed the pressure to ongoing wholesale price compression in mature adult-use markets like Massachusetts and Arizona, partially offset by efficiency gains at cultivation and retail levels.

🤔 THINK ABOUT IT The critical caveat for the broader industry is that adult-use and recreational marijuana remain Schedule I, leaving Section 280E fully in effect for those operations and creating immediate cost allocation complexity for dual-license multi-state operators. For investors managing an estimated $15 billion in deployed cannabis capital, Q1 2026 earnings determined portfolio valuations and merger activity—and the rescheduling catalyst remains the dominant overhang. The DEA's broader rescheduling decision, which would move all cannabis from Schedule I to Schedule III, remains stalled in administrative review with no firm timeline, though Acting Attorney General Todd Blanche announced an expedited hearing process beginning June 29, 2026. If broader rescheduling lands, operators serving adult-use markets would finally access the same tax deductions available to every other legal business in America—potentially unlocking an estimated $200-250 million in annual cash flow for the largest operators alone. The question isn't whether cannabis is safer than alcohol or prescription opioids—zero recorded cannabis overdose deaths in human history versus 95,000 annual alcohol deaths and 16,000+ annual prescription opioid deaths. The question is how much longer a Schedule I classification can survive in an industry generating hundreds of millions in quarterly profits while serving 428,000 full-time equivalent jobs across cultivation, processing, retail, and ancillary services.

July 18, 2026

Federal Judge Blocks Ohio's Hemp THC Ban, Ruling State Discriminates Against Out-of-State Companies

A federal judge in Toledo dealt a significant blow to Ohio's restrictive cannabis regulations this week, blocking the state from enforcing Senate Bill 56 against hemp companies that sued to challenge the law. U.S. District Judge Jeffrey Helmick issued a preliminary injunction protecting the 10 companies that filed suit and vendors selling their products, finding that the state likely violated the Constitution by favoring in-state cannabis operators over federally legal out-of-state hemp producers. Helmick was particularly critical of the legislature's approach: "What Senate Bill 56 has done is to exclude federally legal intoxicating hemp products from Ohio's statutory definition of hemp, redefine them as illegal marijuana, and then to prohibit any company from cultivating or selling those products unless the company has a physical presence in the state of Ohio." The judge noted that the state provided no evidence that federal law permitted such discrimination and pointed to Supreme Court precedent holding that states cannot discriminate against interstate commerce when reasonable non-discriminatory alternatives exist—like age minimums and potency testing, which Helmick noted the legislature had considered but rejected.

💰 MONEY MOVES The ruling signals that protectionist state cannabis laws designed to shield in-state operators from competition face serious constitutional headwinds. Hemp company attorney Andy Mayle called the decision an "efficient and forceful explanation" of how Ohio violated the federal Constitution. The case matters far beyond Ohio: as more states legalize or regulate cannabis and hemp products, similar protectionist schemes could face legal challenges. Meanwhile, the cannabis industry continues to operate in a patchwork of state regulations while waiting for federal clarity—a situation that has created both opportunity and uncertainty for operators nationwide.

Federal rescheduling remains under siege in court, with pharmaceutical and drug testing companies mounting an aggressive legal defense. A pharmaceutical company and the National Drug and Alcohol Screening Association filed papers Thursday arguing that the Trump administration's move to reschedule cannabis from Schedule I to Schedule III will "stimulate the industry and increase marijuana abuse," particularly among adolescents and pregnant women.

Meanwhile, Senate Democrats are moving in the opposite direction. Senate Minority Leader Chuck Schumer, along with Senators Cory Booker and Ron Wyden, filed legislation this week to federally legalize and tax marijuana while creating programs to aid people harmed by criminalization. The bill would also prevent federal recriminalization of hemp THC products scheduled to take effect in November—offering a direct counterweight to the rescheduling litigation. The contrast between these two legislative approaches reflects a fundamental divide: one path maintains federal prohibition with minor adjustments; the other removes cannabis from the controlled substances framework entirely. Cannabis operators are watching both tracks carefully, with medical cannabis businesses attempting to intervene in the rescheduling litigation to defend the reform, though anti-marijuana groups are asking courts to block their participation.

At the state level, regulatory changes continue. A California judge ruled Thursday that the state can reduce its cannabis tax without voter approval, siding with the state against youth-serving organizations that challenged the tax cut. Arkansas medical cannabis sales declined recently despite record sales of $291.1 million last year—though gubernatorial candidates in the state are now publicly supporting legalization, signaling shifting political winds. Delaware's cannabis commissioner is touting new regulatory changes that lawmakers passed this session, claiming they "further strengthen" the state's framework. 🚀 THIS IS COOL These state-level adjustments reflect growing confidence in cannabis as a regulated product category rather than an illegal substance.

🤔 THINK ABOUT IT Cannabis businesses are now operating at an inflection point: federal rescheduling remains contested in court while Senate Democrats push for full legalization, states are refining regulations based on years of data, and judges are striking down protectionist laws as unconstitutional. The DEA rescheduling hearings are complete with no outcome yet—leaving operators in a holding pattern. Yet the trajectory is clear: prohibition is eroding on multiple fronts simultaneously, from federal courts to state legislatures to ballot boxes. The question is no longer whether cannabis will be normalized, but how fast the legal framework can catch up to market reality.