Tom Adams Research

Be Careful What You Wish For

Tom Adams — Sat, 26 Sep 2026 03:35:53 +0000

Tom Adams Research / September 25, 2026

Be Careful What You Wish For

Full legalization is back on the table in DC, but with a tobacco-level 25%-of-wholesale “sin” tax on a product Washington has just called medicine

By Tom Adams · Tom Adams Research

The day after the Trump administration’s rescheduling hearing wrapped on July 15, the industry’s traditional Democratic friends put full descheduling back into play, reintroducing the Cannabis Administration and Opportunity Act that Senators Schumer, Booker and Wyden first floated in 2021.

The press coverage framed CAOA as long-hoped-for legislative descheduling, contrasting it to the executive branch’s mere rescheduling, but few reporters mentioned the 25%-of-wholesale federal excise hiding in Title IV like the asp in Cleopatra’s basket of figs. Our analysis suggests it could be just that deadly.

The 25% rate the bill schedules for year five is levied on what CAOA calls the producer’s “removal price,” or wholesale price, so after the typical 100% retailer mark-up it would amount to roughly 12.5% of what the consumer pays. Added to state excise taxes that average about 15% of consumer prices across the adult-use states in our recent survey, the typical load on every product legal stores sell would reach 27.5% of retail. And that’s before the general sales tax most states also charge.

That is the punitive neighborhood into which governments have hiked tobacco taxes to discourage use of America’s number one cause of preventable death. At the extreme, in Washington state, the load would approach 50% (see graph), not including Washington’s average state/local 9.4% sales tax. But beyond year five, it gets even worse for consumers, and the industry.

Kicking the market when it’s down

In year six, the tax converts from a percentage of the current removal price to a per-ounce charge on flower and a per-gram charge on the THC in everything else, which Treasury resets each year at 25% of the prevailing price over the twelve months ending a quarter before the year begins.

Given the history of prices collapsing in emerging cannabis markets, the tax bill would thereby swell as a percentage of the producer’s price just when operators could least afford it. If wholesale prices fell 10% in a given year, the charge would run 28.5% of the producer’s current-year price; at the 24% annual decline California flower recorded in 2022, a pace commonly seen elsewhere, it would hit 35%.

The worst price-erosion case on record is Michigan, where wholesale flower fell two-thirds in under two years (from about $2,750 a pound in January 2021 to $925 in October 2022); at that roughly 40%-a-year pace, the federal charge alone reaches 47% of the producer’s price.

California and Michigan probably won’t see 24% and 40% annual price declines again, but newer markets probably will. If they have today’s median state excise rate of 15% of retail, price erosion like California’s would make the combined federal and state burden 32.5% of retail in a bad year. If price erosion as severe as Michigan’s happens, the combined load could be 38.7% of retail.

Taking what they can get

Legalization advocates have always taken what they could get from regulators, then worried about the market’s economics afterward. That is how Washington ended up with a 37% excise and how California ended up with local opt-out rules that leave it just 32 licensed storefronts per million residents. Both were the result of pre-legalization negotiation in which industry advocates were forced to cede ground to get legalization rolling. But now it is clear how such concessions can cripple the industry.

Clearly, descheduling needs to be next on the industry’s agenda whatever the DOJ decision on adult-use rescheduling. Interstate commerce, ordinary banking and capital markets, conviction expungement and an exit from the Controlled Substances Act are worth a great deal, and rescheduling by itself delivers none of them, just a cancelling of the Section 280E penalty.

But taking whatever terms regulators offer had to stop someday, and the moment the industry’s leading supporters suggest cannabis should be taxed like tobacco should be that moment. In an “Only Nixon Could Go to China” moment, a Republican executive branch has just decreed state-licensed medical cannabis a Schedule III substance and argued to an administrative law judge that marijuana “has a currently accepted medical use.” With that on the record, the terms of any federal descheduling move deserve a careful look.

Not trying to discourage use

Its sponsors didn’t mention the tax lest it be seen as a simple money grab aimed at an unpopular splinter group of Americans. But two surveys out this summer show that old stereotype no longer holds.

Fifty-four percent of adults drink, 11% smoke cigarettes, 17% smoke cannabis, and 15% eat it (per Gallup). Moreover, 21.4 million use cannabis daily or nearly so, more than the daily cigarette smokers or the daily drinkers (per SAMHSA): cannabis has gone mainstream while alcohol use is dropping and cigarette smokers are the shunned splinter group now.

It can’t be argued that the combined state-federal tax levels fit the harm profiles (see table), which is the explicit reason for taxing cigarette smokers at rates more than three times what alcohol drinkers pay (see table). The government attributes about 480,000 deaths a year to smoking and 178,000 to excessive drinking, none to cannabis, and has just argued in its own rescheduling hearing that the product has medicinal value. Cigs and booze do not, and they cost governments well over $200 billion a year in healthcare and other costs.

Now that science is paying attention, the CDC will someday add cannabis to its “attributable mortality” tracking, and we’ll see if it falls inside or below the range set by alcohol (1.4 per 1,000) and tobacco (13 per 1,000). Meantime, given the modest size of the legal cannabis business, a federal cannabis excise tax would amount to a rounding error in DC’s budget: the Yale Budget Lab, modeling one in August, put the take at $57.9 billion over ten years, about $5.5 billion a year, or three-tenths of one percent of this year’s deficit.

How to guarantee the illicit market survives

No reason to punitively tax cannabis survives a confrontation with the simple idea that, at a 27.5% excise load, the legal channel would struggle to capture the rest of total cannabinoid sales. Cannabis consumers already have the option every excise-tax designer seems to ignore. The illicit trade is still worth $43 billion against $31 billion of licensed sales, per BDSA.

Congress has faced exactly this conundrum once before and did the right thing. It set the 1934 liquor tax low on purpose, to let legal distillers compete with a bootleg trade that still supplied two of every five gallons Americans drank after Prohibition ended.

The recent substantial increases in tobacco taxes show what happens when high excise taxes create space for illicit operators. In California and New York, more than half the cigarettes consumed are smuggled in from lower-tax states, according to the Mackinac Center. The recent Yale report concedes that high federal rates could “inadvertently reinforce illicit competition.” No kidding.

CAOA vs. STATES

The third potential argument for a federal excise tax would be paying for whatever regulatory and enforcement costs Washington would take on with descheduling. But what are those going to be? Twenty-three states already run licensing, testing and tax regimes and pay for them out of that median 15% excise. DC need play no bigger a role than it plays in alcohol.

The House alternative to CAOA, the STATES 2.0 Act, also would deschedule and open interstate commerce with no federal excise at all; it has been on the table in one form since 2018 and still has not had a committee hearing. The two bills diverge mainly on the excise tax issue (see table).

In a CAOA world, every business plan would have to carry a federal excise climbing to 12.5% of retail by year five (and a per-ounce charge from year six set against its own price forecast), and thus show thinner after-tax margins. But the real impact would be at the revenue line as the state markets contract.

The smart move for the industry is patience in the short term while planning ahead to emulate what the alcohol business has done all these years: show up for every hearing, accede to reasonable safety, packaging and advertising rules, and enlist consumers against tax levels that will either cost them money or keep them buying illegally. Alcohol’s key advantage over the years was a distributor in every congressional district; cannabis has a licensed store in about three out of four, with more coming.

Three things to watch: the administrative law judge’s recommendation on adult-use rescheduling and DEA Administrator Terrance Cole’s decision on it; any Senate Finance Committee date for S.5022; and any House movement on STATES 2.0, which picked up its ninth cosponsor in August.

Much will hinge on who controls which houses of Congress next year.

Meanwhile, 280E relief through rescheduling could arrive without a federal excise tax. STATES would complete the descheduling arc without adding to the state-level 15% load under which cannabis already labors.

CAOA as written would impose a punitive tax that is certain, permanent, and designed for a deadly product the government wants less of. That’s not cannabis, and the legal industry can’t afford to let DC treat it like it is.

TOM ADAMS is President and Principal Analyst at Tom Adams Research, and has covered cannabis markets since 2016. He was previously Managing Director of BDSA’s Industry Intelligence group and Editor-in-Chief of Arcview Market Research. Tom Adams Research advises operators, investors and regulators on where cannabis markets are going and which regulatory regimes produce healthy ones. adamsresearch.net

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Death, Taxes and Falling Prices

Tom Adams — Tue, 01 Sep 2026 02:51:14 +0000

Tom Adams Research / August 31, 2026

Death, Taxes and Falling Prices

California’s growth surge shows markets can grow even as the “illegality premium” in prices continues to evaporate

By Tom Adams

To death and taxes, falling prices might be the legal cannabis industry’s contribution to the shortlist of life’s certainties. Every adult-use launch since Colorado’s in January 2014 has seen pricing crumble as the market rationalized around the product’s newly legal status via the rapid disappearance of the illegality premium consumers once granted the legacy trade for the risks it ran. No data suggests that process is over anywhere, although rates of decline are easing up in the most mature markets.

What the data does suggest is that mature markets may not need rising prices to post revenue gains. California just posted a 17.6% year-over-year gain in July, according to BDSA’s retail sales tracking, and consumer spending is now running 9.8% year-to-date, up from a restated 8.5% through June. Each of the last three months has made the year look better, and July’s was the best of them — while every category’s average price fell over the same period.

Nor is California alone. Massachusetts, Connecticut and Pennsylvania also crossed from decline into growth this year, and twelve of the twenty-two markets BDSA tracks are now growing in 2026. If mature markets can grow while prices fall, the industry’s future growth does not hinge on Texas, Pennsylvania, Virginia or Florida opening adult-use markets on timetables that politicians control.

The legal industry is four industries

Sorted by whether a market is growing or shrinking so far in 2026, and then by whether its rate of change is better or worse than its 2025 rate, the BDSA-tracked states are on one of four distinct trajectories (see table). In dollars they are nothing like equal: the seven markets growing faster than they did last year account for 37% of what the BDSA-tracked markets sell, and the five shrinking faster than in ’25 account for 23%. Those 22 markets are 87% of what America buys legally, and their 3.3% growth through seven months is a shade under the 3.4% inflation of the same period — in real terms the industry is not growing at all.

Source: Tom Adams Research analysis of BDSA retail sales tracking data, July 2026. Seven months to July 2026 against the same seven months of 2025; “faster” or “slower” compares that rate with the market’s own full-year 2025 rate.

California is the one that moves the national number on its own; at $3.1 billion over seven months it’s larger than the other six markets in its group combined. But its importance now goes way beyond size. Its growth offers hope to markets from Washington to Florida, and Maine to Arizona.

The industry can only hope the old saw holds: “As California goes, so goes the nation.” If other mature markets can return to growth even while prices continue to decline, the nationwide legal market that had been showing signs of stalling out in the $30-billion range may yet eclipse the illicit market it was supposed to replace (still worth $43.1 billion in BDSA’s current US model). Easing rates of price erosion on top of continuing unit-sales growth (never a problem) amount to a floor forming under the markets that already exist. Sustained growth off that new floor in mature, substantial markets is industry growth that does not depend on recalcitrant legislatures to legalize more states.

What separates California from Michigan, and Colorado

In California the value-added categories are driving the growth — vape spending up 17.4% and pre-rolls up 14.5% over the seven months, against flower’s 3.9%. Prices continue to erode, but volume increases are now able to drive revenue growth. But in Michigan the same categories are collapsing in dollars as price declines still outstrip volume gains: vape sales were down 15.2% over the same seven months, pre-rolls 11.1%, and edibles 26.8%. On volume, though, Michigan consumers are making exactly the same move as Californians: per-state tracking, vape cartridge pounds are up 35.9% and compound concentrates are up a whopping 122% since 2024.

The difference is what retailers can charge in those value-added categories. California prices fell in the half, but only by 0.4% (raw concentrates) to 5.4% (infused pre-rolls); Michigan’s revenue per pound across all inhalables fell by a third over the past two years, from $1,827 to $1,219. Both California and Michigan had robust medical markets before launching adult-use sales in 2018 and 2019, respectively, so both have had about the twelve years since Colorado launched the adult-use era in 2014 to build categories that hold a price, and only one of them did: California-launched STIIIZY (vapes), Jeeter (pre-rolls) and Kiva (edibles) were already flagship products for three of the country’s ten largest brand houses by 2022 (“House Party,” Global Cannabis Times, August 2023).

The poster child for cannabis market maturation syndrome is Colorado, down 41% from its 2021 spending peak and another 6.5% in 2026 so far. Its adult-use plants in cultivation are down 58% from their 2021 peak and cultivation licenses down 45%. But it is well positioned for a return to growth: retail stores are down only 4.4% from their 2025 peak, and at 114 per million residents its store density trails only Oregon’s among the eight markets here. Vireo Growth bought 17 Colorado dispensaries from PharmaCann in December for $49 million, taking it to 41 stores in the state, after taking control of Schwazze by buying 86% of its defaulted notes two months earlier. Buying retail in a shrinking mature market is a bold move few others have dared, a gamble that attrition on the supply side means repricing is nearly finished and profits can ensue.

Access is what matters

The lesson for other states is that where regulators allow stores, people buy legally when their black- and gray-market options are limited. Michigan has 82 retail licenses per million residents, and they spend $312 a head in licensed shops; California has just 44 per million and residents spend $122 per capita. That relegates it to the underperforming group (see graph) that includes access-starved Arizona, Illinois and Ohio.

Source: Tom Adams Research analysis of BDSA and state regulator data. Store/license counts as published by each state.

California has no state cap on stores. Its limit is municipal: 302 of California’s 540 cities and counties allow no retail cannabis businesses. More than half the jurisdictions in the state have decided, for now, that their residents should buy from somebody unlicensed. The two markets in BDSA’s tracking where store counts are fixed by statute, Arizona at 22 per million and Illinois at about 16 per million, both sit low on spending per resident. That is what a starved market looks like from the operator’s side, and it is not all gloom, since it tends to lead to higher average prices, more revenue per store and better margins.

Regulators have to get out of the way

But industry growth is essential for a bunch of companies selling themselves to investors as growth stories. And the California recovery suggests that growth from here is a conversion project rather than a legalization one. The illicit trade was worth $51.4 billion when Colorado opened the legal era and is still worth $43.1 billion, against $30.9 billion of licensed cannabis; another $24.6 billion of cannabinoid demand runs through hemp shops and filling stations and $1.7 billion through pharmacies — the pharmacy share almost entirely Epidiolex, a CBD medicine for childhood seizure disorders that medical cannabis companies first brought to desperate parents and a pharmaceutical company only later monetized at premium prices.

Total American cannabinoid demand is therefore near $100 billion and the licensed channel holds under a third of it. Every one of those dollars is reachable in principle — the hemp share through the pending federal ban (and state enforcement of unknown success), the illicit share by opening stores, and even the pharmacy share by a legal industry that could sell the same CBD molecules for a fraction of Epidiolex’s price once parents trust what is on the dispensary shelf. None of that conversion would require another state to legalize anything.

The running room for growth already exists in some of the country’s largest states. Ohio’s legislature set a ceiling of 400 dispensaries in December and the state has only 227; New York has no ceiling and a municipal opt-out that closed permanently at the end of 2021, so its access can only widen; California needs no new state law at all, only city councils to change their minds and open the local tax spigot.

Every state that has let the stores open has discovered the demand was already there, buying somewhere else. And that has been the legal industry’s chief contribution so far to life’s certainties: people love cannabis and will get it where they can.

Tom Adams is President and Principal Analyst at Tom Adams Research, and has covered cannabis markets since 2016. He was previously Managing Director of BDSA’s Industry Intelligence group and Editor-in-Chief of Arcview Market Research.

Tom Adams Research advises operators, investors and regulators on where cannabis markets are going and which regulatory regimes produce healthy ones. adamsresearch.net

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California’s Cannabis Bust May Be Ending

Tom Adams — Fri, 31 Jul 2026 15:00:00 +0000

Tom Adams Research / July 31, 2026

California’s Cannabis Bust May Be Ending

Sales Rose 7.8% in the First Half — the First Gain After Four Straight Annual Declines

After four annual declines, California may have finished paying back the “illegality premium” legal markets never earned. Other states still owe consumers a rebate.

By Tom Adams

California’s legal cannabis market may have finally found its bottom. Sales rose 7.8% in the first half of 2026, to $2.6 billion from $2.4 billion, the first gain after four straight years of decline that left the market 16.6% below its 2021 peak, according to BDSA. The turn did not come out of the blue — the annual decline had already narrowed to 2.1% in 2025, the mildest year of the bust.

The boom-bust cycle is not just a California story, and the top line of every other western market is still shrinking — Nevada down 9.2%, Colorado 6.7%, Arizona 5.4%, Oregon 2.8% and New Mexico 1.4% in the same half — while the newer markets east of the Mississippi have barely begun the descent California is climbing out of. A few recent launches like Minnesota are still booming. California is not different from these markets, just four to six years ahead of them (see table).

Source: Tom Adams Research analysis of BDSA data (Cannabis Market Forecasts, April 2026).

Its four-year slide and apparent recovery point to the industry’s central strategic question: what stops a newly legal market from growing, and what brings growth back? Hanging in the balance is a legal market that threatens to stall near $31 billion in national sales, well below the $51 billion the illicit market was producing when Colorado opened the legal era in 2014. Whether the licensed market ever overtakes the one it was built to replace hinges on the lessons California is learning now.

The price was never real

Cannabis 101 is a history class, starting with a unit on pricing. It’s a free market, so California dispensaries sold an ounce of flower for as much as $340 in the early years, near what the street charged. Operators hoped to keep the robust prices the legacy market commanded while shedding the legal risk that justified them. It just wasn’t going to happen.

There was never a hard cost basis for those prices. Consumers, through their local dealers, had paid legacy growers a premium for the risk they ran to their property, freedom and lives — not for the cost of the crop. RAND estimated in 2010 that a legal pound would cost $200 to $400 to grow indoors, against illicit weed then wholesaling for $2,000 to $8,000 (depending on how far from the NorCal grows it had to travel) and predicted legal prices would fall “quite possibly a full order of magnitude.”

They did, and everywhere on about the same schedule. Colorado and Oregon opened their adult-use markets near $2,000 a pound (in 2014 and 2015). Within three to four years each had crashed below $1,000 — Colorado to $880 by 2018, Oregon to $844 — and wholesale prices have bounced along that floor since, according to tracking by Cannabis Benchmarks. Every subsequent adult-use market — including California (see graph) — launched with wholesale pounds between $1,500 and $2,000 and gave the premium back within a few years, especially to the bulk buyers that pull down the weighted averages. Strategic planners have largely internalized that painful early lesson.

Source: Cannabis Benchmarks® / New Leaf Data Services.

The shakeout continues

The second lesson is trickier. Going in, growers know that adult-use legalization will feature a brief window of short supply, pricing power, and profitability. Then wholesale prices will fall to cost-plus-a-thin-margin, as any commodity does. If you couldn’t expect a floor to develop, you’d be crazy to invest in a new state (and probably smart to hurry out of the ones you’re already in).

The California experience suggests wholesale prices do stop plummeting once supply constricts — and California’s supply chain has been constricting for almost three years. At retail, active licenses have dropped nearly every quarter since peaking near 1,932 at the end of 2023, to 1,740 by early 2026; and closures accelerated as the bust deepened — ceased sites peaked at 77 in the last quarter of 2024. But the carnage at retail is easing up: ceased sites fell to just 15 in the first quarter of 2026, the fewest on record against 60 a year earlier.

The cultivation field thinned even harder: Humboldt County alone has lost more than 1,400 legal grow sites. Over half its remaining growers are behind on their local taxes. We’ll see if this first-half uptick in consumer spending comes soon enough to save some of them.

Retail revenue turns positive as price pressure eases a bit

Here is what the price pain buys. Cheaper cannabis sells more of it, and California’s five-year price collapse drove an explosion in units: combined pre-roll sales more than doubled and vape volume rose more than tenfold from 2020 to 2025, with edibles climbing too (see graph). That growth is now cooling — pre-rolls up 12% in the latest half against a 16%-a-year compound annual growth rate 2020-2025, vape up 9% against 64% — but that is still growth other consumer product sectors only dream about. Raw flower continues to shrink, but total inhalable-unit sales rose 5.5% in the half, after a 13.4% five-year CAGR.

Source: Tom Adams Research analysis of DCC data — California DCC “Sales and Price per Unit” dashboard.

The shrinking share of raw flower is a positive for the licensed channel. The overall volume data makes it clear consumers are not abandoning cannabis, and that it is simply a matter of changing consumer preferences (“What are we, cowboys?” I suggested to National Geographic last year when they wondered what was behind the shift away from rolling your own). The shift actually reflects the industry’s successful product development efforts, which will stand it in good stead in the continuing competition with illicit and hemp-based markets.

The price slide that facilitated all the volume growth is now doing what is typical in a bottoming market: decelerating. The steep high-single-digit annual retail declines of the bust have given way to low single-digit drops across most categories (see graph), while wholesale has ground along its sub-$1,000 floor for years. Deceleration on both sides — volume up and price down — is a classic sign of a product category transitioning out of its boom-bust early days.

Source: Tom Adams Research analysis of DCC data — California DCC “Sales and Price per Unit” dashboard.

The recovery has a guest list

Of course, the first-half uptick could still prove to be a dead-cat bounce. Oregon, after all, shrank 20% from its 2021 peak through 2023, posted a 1.1% gain in 2024, then dropped 3.6% in 2025, and 2.8% so far in 2026. Colorado hasn’t posted an annual gain since it peaked in 2021, was down 41% by 2025 and shrank another 6.7% in the first half of 2026. Nevada has shrunk 31% during the same stanza and is down almost 10% so far this year.

Or California may continue to recover but other markets continue to shrink. In the Golden State, the licensed market’s competitive position against its rivals — hemp-derived and illicit — is strengthening. Legal California flower now sells for about $63 an ounce at retail — less than a fifth of the $350 to $400 that illicit sinsemilla commanded in 2010. The illegality premium is not merely shrinking at the counter and the farm gate; it is largely gone.

So, the illicit market that still commands 63% of California cannabis sales is no longer defended by a massive price advantage, just the modest one granted it by state regulators with the high taxes and regulatory costs they impose on the licensed pipeline. What protects the illicit market now is access, not price: most local jurisdictions still refuse to license a storefront. Meantime, legal operations have borrowed the CPG playbook and have scale and efficiency on their side. Any time state and local governing bodies unleash them, battle-hardened licensed operators are in position to eliminate the illicit trade the way the professionally run liquor channel finally got rid of bootlegging in the 1960s.

As California goes?

The competitor that could recede fastest, though, isn’t the illicit trade but the hemp pipeline. California spent 2025 beginning to clear intoxicating hemp from store shelves — first ingestibles, after the state’s September 2024 emergency regulations, then the inhalable vapes and pre-rolls that compete most directly with licensed product, as AB 8 passed last fall. That the biggest first-half volume spikes show up in exactly those formats is suggestive of what a November national ban on intoxicating hemp could do elsewhere.

The bust California appears to be exiting is not a verdict on the industry. It is a stage, and everybody gets a turn. The “end-is-near” fatalism that has haunted the sector since the COVID spike and subsequent downturn did valuable work puncturing the sky’s-the-limit balloon of the 2010s, but it has outlived its usefulness in strategic and investment planning.

What four years destroyed in California was unrealistic pricing, not the market — and the $24 billion hemp-derived cannabinoid market that exploded across the country while dispensary sales fell in mature states is all the evidence anyone needs that demand never left the category, only the licensed channel (see Investors Are Reading the Wrong Tape). Every high-growth market I’ve studied runs this cycle: demand explosion, then oversupply and desperate price competition, then company attrition until the survivors finally have room to make money.

California has finished paying for the illusion that legal markets could command illicit-market prices; the eastern states are just making a down payment on the steep tuition. But the first-half upturn in California holds out the promise of gainful employment after graduation for operators in the licensed cannabis trade across the country.

TOM ADAMS is President & Principal Analyst at Tom Adams Research, where he publishes monthly Insights on the worldwide cannabis industry. The most experienced strategic consultant in legal cannabis, he was founder of Adams Media Research, head of Industry Intelligence at BDSA, and editor of the Arcview/BDSA State of Legal Cannabis Markets annual reports. Subscribe to the monthly Insight at adamsresearch.net or reach Tom at tom@adamsresearch.net.

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The 2026 Global Cannabis 50

Tom Adams — Sat, 13 Jun 2026 15:00:00 +0000

Tom Adams Research / June 13, 2026

The 2026 Global Cannabis 50

The Worldwide Cannabinoid Industry’s Biggest Public Companies

The five American multistate operators that have anchored the Global Cannabis 50 since 2022 are still the five largest cannabis companies in the world — and, as a group, smaller than they were in 2023. The bigger stories emerging from our analysis of 2023–2025 net-revenue growth are the companies climbing toward them fast: a German importer, a Quebec grower, a clutch of international and Canadian mid-caps.

By Tom Adams

Curaleaf, Trulieve, Green Thumb Industries, Verano and Cresco Labs hold the top five slots for a third straight edition of the Global Cannabis 50. But three of the five booked less revenue in 2025 than they did in 2023, and Green Thumb is the only one that grew in both 2024 and 2025.

When the companies that define a market stop growing, any growth in the overall market has to be coming from somewhere else.

Source: BDSA forecast, April 2026

Curaleaf, still number one, slipped to $1.3 billion from a peak near $1.35 billion two years earlier; Verano fell to $822 million and Cresco to $656 million, each down double digits over the span. Green Thumb, the exception, now sits within about $6 million of Trulieve for second place. The American market these operators dominate has settled into a price war, and a price war is not where top-line growth lives. The sharpest climbs belong to companies few Americans have ever heard of. Cantourage, a Berlin-based medical-cannabis importer running an asset-light model, rose from a notional 50th on 2023 revenue to 22nd, more than quadrupling revenue over the two years to roughly $102 million. MTL Cannabis, a profitable Quebec grower built up through the Canada House roll-up, more than tripled revenue to climb 26 places to 28th. Of the ten fastest-growing names on the list, eight are based outside the United States.

The lone big American mover is the exception that proves the rule — and a sign of the times. Vireo Growth tripled revenue to $269 million and jumped to 8th, not on the strength of the U.S. market but by buying itself bigger though four all-stock acquisitions completed in 2025 — Deep Roots Harvest in Nevada, Proper Brands in Missouri, WholesomeCo in Utah and The Flowery in Florida. The other big gainers were outside the US: Canada’s High Tide grew to $426 million, and Cannara, Vext, Rubicon and Avant each climbed double-digit places. None of them got there on the strength of the U.S. market the giants depend on.

That growth overseas played out against the most brutal attrition among US companies the list has seen since we created the Global Cannabis 50 in 2022 for Global Cannabis Times — a ranking Tom Adams Research will now track going forward.

The most brutal turnover yet

Twenty of the 2024 Global Cannabis 50 are gone from the 2026 list — about twice the number that dropped off between the inaugural 2022 ranking and the 2024 edition. They left in two ways. Some were acquired and folded into larger operators — Acreage into Canopy; Nova, Indiva and Valens into SNDL. The rest failed, and were run through receivership (The Cannabist, Ayr Wellness, TILT, Schwazze, Gold Flora). Some of the latter group— Leafly, Blüm, Lowell Farms — are still listed but no longer reporting.

The common thread is debt that couldn’t be refinanced. Nearly all of the money U.S. growers and retailers raised over the past year — 99.7% — came as debt rather than equity, the peak of a half-decade climb that lifted debt’s share of worldwide cannabis financing to 82% in 2025 from 58% a year earlier (Viridian Capital Advisors). So when many operators stumbled it was creditors, not strategic buyers, who walked away with the assets — Vireo’s October move on 86% of Schwazze’s debt is the template. A list that once turned over on who was growing now turns over on who can refinance.

A wider lens

This edition widens the aperture of the Global Cannabis 50 by geography and by including hemp-derived cannabinoids and pharmaceuticals, all three sectors of the total cannabinoids market we defined last month (see “Investors are reading the wrong tape”). Each of the 50 draws more than half of its revenue from the cannabinoids market (hence no Jazz or Scotts).

Every figure is as-reported revenue, net of excise taxes, from primary filings for that year. Where a company divested or restated for another reason, the year is shown as reported and the change is treated as the news it is. The ranking metric has evolved over the three editions; this year it is based on each company’s fiscal year ending nearest December 31, 2025 (Aurora’s revenue, for instance, is from its fiscal year ended March 31, 2026).

Light shining at the tunnel’s end

The wider lens sheds more light on cannabinoid companies than ever before — and, after years of static rankings at the top, it looks like many likely changes are ahead. In Germany, the April 2024 law that legalized adult possession and cannabis clubs also pulled medical cannabis out of the narcotics statute and into ordinary pharmacies, and the market has since roughly tripled. — lifting Cantourage up this list.

On April 28, 2026, the United States moved medical marijuana to Schedule III — the first federal reclassification of cannabis in fifty years — with a DEA hearing on rescheduling adult-use cannabis set for June 29 to July 15. A November 2026 federal ban on hemp-derived cannabinoids, meanwhile, looms forbiddingly over many of these companies, while others stand to benefit if hemp-based competition is curtailed.

The reclassification of medical cannabis in the U.S. is a balance-sheet event, not directly a sales driver as it was in Germany: medical is barely a quarter of U.S. legal sales, per BDSA, in a country where most people already have access. What it does deliver is real but indirect: ending the punitive 280E tax treatment frees after-tax cash flow — the cheapest growth capital available in a market where 99.7% of financing now comes as debt.

Strategies diverge from here

The actual growth lever for legal cannabis has always been new markets legalizing, and domestically that is essentially just Texas, which is expanding from three medical licenses to fifteen, all able to operate statewide. Four of the top five long-time leaders of the Global Cannabis 50 won Lone Star licenses — Trulieve, Green Thumb, Verano and Cresco — but #1 Curaleaf did not.

With the long-time leader flat and shut out of the one state still issuing licenses, a growing Green Thumb could ride Texas past Curaleaf to number one on the next list. Trulieve will certainly drop from number two, having just spun off its adult-use operations from medical to uplist to the NYSE on June 10.

Curaleaf’s answer isn’t Texas; it’s abroad. Alone among the U.S. operators it has acquired and built a substantial international business — Curaleaf International, the largest vertically integrated platform in Europe, which booked $172.5 million in 2025, up 183% from 2023, and roughly 15% of company revenue in the fourth quarter while its U.S. base shrank.

That is the choice this list now frames for the traditional industry leaders in the U.S. and Canada: chase the last licenses at home or build where the growth already is, overseas. Per BDSA’s April forecast, Canadian sales grew just 4% and the U.S. just 10% from 2023 to 2025 — while international markets exploded 82%.

The 2026 Global Cannabis 50

The 2026 Global Cannabis 50 — net revenue (US$ millions)

#	Company	FY2023 (US$ M)	FY2025 (US$ M)	2-yr change (’23→’25)
1	Curaleaf	1,346.6	1,268.1	-6%
2	Trulieve	1,129.2	1,181.2	+5%
3	Green Thumb Industries	1,054.6	1,175.3	+11%
4	Verano	938.5	821.5	-12%
5	Cresco Labs	770.9	655.8	-15%
6	Ascend Wellness	518.6	500.6	-3%
7	High Tide	363.6	426.4	+17%
8	Vireo Growth	88.1	268.8	+205%
9	Innovative Industrial Props	309.5	266.0	-14%
10	Jushi	269.4	262.9	-2%
11	TerrAscend	317.3	260.6	-18%
12	Aurora Cannabis	199.0	230.8	+16%
13	Village Farms	285.6	215.9	-24%
14	Canopy Growth	306.9	195.4	-36%
15	Organigram	120.9	186.4	+54%
16	Glass House	160.8	182.0	+13%
17	Marimed	148.6	159.8	+8%
18	Cronos Group	87.2	146.6	+68%
19	iAnthus	159.2	144.0	-10%
20	Auxly	74.9	108.4	+45%
21	Planet 13	98.5	103.4	+5%
22	Cantourage Group	25.5	102.1	+300%
23	Fluent	97.3	86.7	-11%
24	Decibel	78.7	80.6	+2%
25	Vitura Health	78.7	80.4	+2%
26	InterCure	96.4	77.0	-20%
27	Cannara Biotech	42.3	76.4	+81%
28	MTL Cannabis	23.2	75.3	+225%
29	Chicago Atlantic	62.9	62.9	+0%
30	Vext Science	34.8	51.4	+48%
31	NewLake Capital Partners	47.3	51.1	+8%
32	Papa Medical	—	50.3	n/a
33	Charlotte’s Web	63.2	49.9	-21%
34	Red White & Bloom	65.4	46.4	-29%
35	Rubicon Organics	29.7	42.5	+43%
36	IM Cannabis	36.2	39.2	+8%
37	LFTD Partners	51.6	36.9	-28%
38	Leef Brands	30.6	34.8	+14%
39	Grown Rogue	23.4	32.4	+39%
40	MediPharm Labs	24.5	32.3	+32%
41	AFC Gamma	70.5	31.3	-56%
42	C21 Investments	28.9	30.1	+4%
43	Avant Brands	19.5	25.7	+32%
44	Little Green Pharma	13.3	24.1	+81%
45	cbdMD	24.2	19.2	-21%
46	Synbiotic SE	4.2	18.7	+348%
47	Avicanna	12.4	18.2	+46%
48	CV Sciences	16.0	13.8	-14%
49	Althea / Peak Processing	16.8	10.2	-40%
50	Cann Group	14.5	8.7	-40%

Revenue ranking by each company’s fiscal year ending nearest December 31, 2025, as publicly reported as of June 11, 2026 (e.g., Aurora’s year ending 3/31/26), net of excise and sales taxes. Revenue reported in native currencies converted to US dollars at that year’s average exchange rate. Source: Company filings; Tom Adams Research.

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Investors are reading the wrong tape

Tom Adams — Fri, 15 May 2026 14:48:25 +0000

Tom Adams Research / May 15, 2026

Investors are reading the wrong tape

The “total cannabinoid market” is $57 billion and growing twice as fast as the state-licensed dispensary channel investors fixate on. Now, governments are starting to steer more of that demand into dispensaries.

By Tom Adams

Investors have stranded public cannabis stocks at a small fraction of their 2021 peaks for more than three years now, fixated on regulation rumblings and the meager single-digit growth state-licensed cannabis posted in 2024 and 2025. They’ve missed two structural factors that are changing quickly.

The first factor is the robust health of the overall addressable market for cannabinoid products. The “total cannabinoid market” — state-licensed plus hemp-derived plus FDA-approved pharmaceuticals — reached $57 billion in 2025. It grew at a 20% compound annual rate from 2020 through 2025, with the hemp-derived channel taking over for the state-licensed market as the chief engine of growth.

The three channels taken together are almost twice the size of, and growing twice as fast as, the licensed-cannabis pipeline alone. Licensed cannabis retailers — public multi-state operators (MSOs), private regional chains, and the independents that hold most of the market — are well positioned to roll up that broader demand, given the latest regulatory tremors in Washington and the states.

The second factor is the imminence of substantial changes in that total cannabinoid market. The November 12, 2026 federal hemp ban is six months away from taking effect, with no legislative fix in sight. The April 23, 2026 Schedule III rescheduling of medical marijuana enhances dispensary free cash flow and competitive positioning. Together, those two events should redirect at least some hemp-derived demand into the licensed channel and retire the threat of pharmaceutical competition — both gifts delivered by regulators, more or less by accident, to licensed retailers.

Three channels, $57 billion

Wall Street has ignored that, in total, the three legal channels of the total cannabinoid market are one of the fastest growing consumer product categories of all time — running at a 20% compound annual growth rate (CAGR) 2020-2025, and an eye-watering 29% CAGR over the full 2014-2025 stretch since Colorado legalized adult use. In recent years only GLP-1 drugs (Ozempic et al.) have come close to generating that kind of demand in a hurry, growing at 41% CAGR over eight years to $47 billion — but with insurance paying for most of it at pharmacies.

Demand for cannabinoids flows through three legal channels, separated mainly by government’s incoherent approach to regulating them. But the products are essentially the same, and consumers get the connection. Before there was pharmaceutical Epidiolex, hundreds of “medical refugee” families moved to Colorado for the high-CBD Charlotte’s Web strain, used by parents of kids with Dravet and Lennox-Gastaut syndromes.

State-licensed cannabis gets all the ink — medical and adult-use retail in the 40 states with active programs, dominated by private operators alongside public MSOs like Curaleaf, Green Thumb, Cresco, Verano, and Trulieve. Hemp-derived cannabinoid products — CBD plus the intoxicating hemp compounds that emerged after the 2018 Farm Bill — sit in a state-by-state framework that makes them legal in 32 states. It’s dominated by privately held companies, with a handful of public ones like Charlotte’s Web. FDA-approved pharmaceuticals, mainly Epidiolex, are the third channel, with Jazz Pharmaceuticals the main public stock option.

In 2025, the total cannabinoid market broke down into $30.9 billion in the licensed cannabis channel (BDSA’s April 2026 forecast), $24.6 billion in hemp-derived spending in states that legally permit it (Adams Research estimates, drawing on Whitney Economics, Brightfield Group, USDA and state data sets), and $1.7 billion for U.S. pharmaceutical cannabinoid consumer spending (our estimate based on Jazz Pharmaceuticals filings and IQVIA data).

The matched-definition framing matters. The hemp numbers (see graph) apply a legal-share haircut — counting only the roughly 77% of consumer demand in states with affirmative regulatory frameworks for hemp-derived cannabinoid products — to put it on the same footing as BDSA’s licensed-cannabis figure, which excludes illicit-market sales.

DC kicks off a game of “capture the flag”

Two structure-shaking events in recent months should redirect more cannabinoid demand toward the licensed channel. The hemp ban passed in November 2025’s budget reconciliation bill will close the 2018 Farm Bill loophole that let intoxicating cannabinoid products proliferate, effective November 12, 2026 — now six months away. The April 2026 rescheduling of medical marijuana removed federal regulatory friction from state-licensed medical cannabis programs while leaving the hemp ban untouched.

Assuming the hemp ban takes effect in November, hemp-derived demand will redirect to licensed cannabis at a capture rate that depends on state enforcement and the availability of licensed alternatives. If even a quarter of the hemp-derived market shifts, the channel becomes dominant again (see “Did the Feds Just Double the Growth Rate of Legal Cannabis?”). Updated with BDSA’s April 2026 updated forecast, the math is sharper still: the US licensed market projected at $37 billion by 2030 lifts to roughly $47 billion at 25 percent capture.

Curaleaf chairman Boris Jordan, on the company’s Q4 2025 earnings call in February, suggested the capture figure could be 50 percent — citing observed revenue gains in Massachusetts after that state’s hemp tightening. At Jordan’s 50 percent, the 2030 incremental nearly doubles to $19.7 billion and the licensed-channel’s CAGR 2025-2030 clears 12 percent.

Texas will be the bellwether state in this reordering of the total cannabinoid market. Last year’s HB 46 brought 31.9 million people into a real medical market and quintupled the licensed dispensary count from three to fifteen, all of whom can now operate statewide. The hemp regulatory situation in Texas — Governor Abbott’s veto of a sweeping ban, an executive order regulating without prohibiting, a live state-court fight over those rules — determines how much the medical expansion captures redirected hemp demand. With political cover for medical cannabis now beaming out of Washington, North Carolina, Wisconsin, Tennessee, Indiana, Kansas, and Idaho are plausible follow-ons.

What November 12 will test

With the hemp ban due to take effect November 12, fix efforts are stalled for now. The Hemp Planting Predictability Act, the U.S. Hemp Roundtable’s principal legislative push, would delay the deadline two years; the Wyden–Merkley Cannabinoid Safety and Regulation Act would replace the ban with a regulatory framework. Neither has cleared a committee hearing, so it seems likely that the licensed channel will get a window in which to recapture some of the growth it has yielded to hemp in recent years.

Most public cannabis operators positioned themselves defensively for the hemp boom. Curaleaf dabbled a bit, but chairman Boris Jordan called hemp a non-needle-mover at MJBizCon in December and wound the company’s hemp operations down through Q1. Cresco, Verano and Trulieve never materially entered hemp and lobbied for the ban Curaleaf is now complying with. Green Thumb, through its complex deal to license its brands to Agrify (now RYTHM, traded in the US on Nasdaq as RYM), is the most flexibly positioned MSO across both the state-licensed and federally-legal hemp channels. Post-ban, it has continued to push those brands into hemp-THC beverages in deals with Chicago’s United Center and Navy Pier.

The total cannabinoid market is the right lens for valuing what comes next. The case for licensed cannabis companies — emerging from the turmoil ahead in strong shape — rests on three structural facts: an addressable market roughly twice the dispensary line and growing twice as fast; federal action delivering more of that market to licensed retailers; and a fragmented field — where the public MSOs are a minority share of the licensed channel and a smaller share still of the total cannabinoid market.

All of that leads to the natural next stage of cannabinoid market development, and it leaves room for disciplined consolidators, public, private, or new entrant, to roll up the redirect. That’s the structural change investors should be valuing and executives should be planning around — not the shrinking dispensary growth rates people keep mistaking for the whole story.

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Did the Feds Just Double the Growth Rate of Legal Cannabis?

Tom Adams — Sat, 14 Feb 2026 06:44:29 +0000

Global Cannabis Times / December 1, 2025

Did the Feds Just Double the Growth Rate of Legal Cannabis?

The Hemp Prohibition enacted on November 12 may have unintended consequences for its anti-cannabis advocates.

By Tom Adams

IF THE HEMP-DERIVED cannabinoids market really is eliminated by the surprise federal action against it November 12, the growth rate of the state-licensed market could nearly double through 2029. That would create a legal market that’s nearly $10 billion larger than BDSA’s current forecast of $39 billion, generating an additional $21 billion in legal cannabis revenue over the next four years.

Detonating the hemp-derived cannabinoid market November 12 was business as usual in many ways. Prohibition-minded legislators slipped 11th-hour language banning any form of psychoactive products derived from hemp into the must-pass H.R. 4121, which reopened the government after a 43-day partisan stand-off. That kind of legislative cramdown is how sausage gets made in the DC slaughterhouse these days.

For prohibitionists, it was also the same old same old: ever since 1937’s Marihuana Tax Act they have been doing everything they can to get the federal government to prevent legal access to cannabis by what is now the one-quarter of Americans that enjoy cannabinoid products regularly. But the forces of prohibition may have shot themselves in the foot this time.

Did Prohibitionists Just Do a Solid for Legal Cannabis?

First, by closing the loophole in the 2018 Farm Bill, prohibitionists clearly did an inadvertent favor for the state-licensed market they revile. The growth of that market has been crimped in recent years by what some licensed players like to derogate as “gas-station weed.” If the hemp ban works, it could reignite growth even in the most mature state-legal markets, at least those with plenty of dispensaries to meet the demand.

Secondly, the move puts legalization on the front burner in Washington. With the ban scheduled to go into effect as Americans go to the polls for a mid-term election in November 2026, every candidate will now have to take a stand on cannabis legalization. In deciding that stance, they will have to reckon with two key facts: 1) about two-thirds of Americans approve of legal cannabis, and 2) only 15% of Americans approved of the job Congress is doing in Gallup’s early-October polling.

Thirdly, by passing a ban it has no way to enforce, the federal government has highlighted how impotent it has always been to implement its non-sensical cannabis policies. The 40 states with at least medical licensing regimes (and hence tax revenue to protect) have probably now won the 10th Amendment debate about who will regulate non-medical cannabis markets in the long term.

The New Terms of the Debate

Not everyone agrees that there is any upside to DC sticking its finger in the hemp-derived dike, as was evident from discussion at the fortuitously scheduled November 17 IgniteIt “Cannabis Capital and Policy Conference” in DC.

Those in the hemp-derived space couldn’t help but be horrified. “It’s not going to be good for cannabis in the long term,” said Jim Higdon, COO of Cornbread Hemp and VP of Outreach at the US Hemp Roundtable. “We need an extension on the 360 days (sic), but in an election year the likelihood is very low.”

Of course, some from the licensed space that has struggled with hemp-derived competition were delighted. “Get ready for all the fun to come back into the state-licensed market,” said Jushi’s Chief Strategy Director Trent Woloveck.

“Finally, everybody now needs to get together to get one piece of transparent legislation,” said Boris Jordan, executive chairman of the industry’s biggest company Curaleaf, one a handful of the licensed-market giants (along with GTI, Trulieve, Canopy Growth and Tilray) to expand into hemp-based products and channels in recent years.

In line with Jordan’s goal of “One set of rules around the plant for the whole industry,” the newly formed One Plant Alliance released its manifesto in the wake of H.R. 4121’s signing, setting up Three Golden Pillars for federal regulation modeled on US alcohol law: requirements for lab testing, accurate labeling, and age verification.

Of course, moving cannabis entirely out of the Controlled Substances Acts’ FDA-centric schemata would also be required for the federal government to play the same role in cannabis as it does in alcohol. But as OPA founder Steve DeAngelo noted to me in a LinkedIn discussion, “We believe there is opportunity in crisis…now is the time for boldness, not compromise.”

What’s at Stake Here?

There are three directions revenue currently going to companies in the hemp space could go now: the licensed cannabis business, the illicit market, or up in smoke. We think most of it will come into legal channels, but very slowly given the fact that an outsized portion of hemp-product sales occur in states where, at least for now, there is no licensed market or too few dispensaries.

So, the impact of the ban will vary dramatically by state. The biggest upside could be seen in states currently seen as oversaturated at retail and without state-level hemp bans like New Mexico and Montana. Medical-only states like Texas and Florida, despite enormous hemp-derived markets, will only see big gains as they add dispensaries and finally legalize adult use.

Nationally, our analysis below suggests the ban should make an appreciable difference in licensed-market growth going forward. It’s difficult to nail down the current size of the hemp-derived cannabinoids market with certainty, given its diverse retail channels. The most comprehensive approach we’ve seen was taken by Whitney Economics in its “2023 U.S. National Cannabinoid Report.” which derived its projection of $28 billion in consumer spending that year on survey responses from 800 businesses in 45 states, and per-capita spending averages derived from the handful of states that provide hard data on hemp sales. We’ve seen other estimates as low as $20 billion.

But WE chief economist Beau Whitney (who was present with me at the 2016 creation of BDSA’s Industry Intelligence group) told me at the IgniteIt event that his estimate doesn’t even include gas stations, few of whom responded to his survey.

To generate a ballpark estimate of the upside for licensed-market sales, we started with Whitney’s 2023 estimate of $28 billion in sales and generated a hemp-derived “what-if” forecast out to 2029. That forecast assumes no change in the pre-November 12 laws, and growth of hemp-derived product sales from 2023 to 2029 at the same modest rate BDSA forecasts for the licensed market, a compound annual growth rate (CAGR) of 5.4%.

The exercise suggests that, even if only one-quarter of what otherwise could have been $38 billion in 2029 hemp-derived sales goes to legally licensed operators, it would nearly double the state-licensed market’s growth to a 9% CAGR through 2029, putting spending at $49 billion, rather than $39 billion BDSA currently forecasts.

Hemp Ban Upside for Licensed Cannabis ($ Billions)

Year	Current Forecast	Licensed Capture*	Incremental Revenue	Adjusted Forecast
2025	$31.6	0%	—	$31.6
2026	$33.3	5%	$1.6	$35.0
2027	$34.9	12%	$4.1	$39.1
2028	$37.1	18%	$6.6	$43.6
2029	$39.1	24%	$9.2	$48.3
’25–’29 CAGR	5.5%			11.2%

*Assumed licensed-market capture rate of hemp-derived cannabinoid sales if the loophole is closed. Source: Adams Research analysis of BDSA current forecast (licensed) and Whitney Economics 2023 estimate (hemp-derived).

That theoretical $10 billion in incremental 2029 legal revenue could well be an underestimate. Many adult-use markets have been shrinking in the face of hemp-derived competition (see my October 22 “The Hemp Loophole Takes Its Toll” column). In fact, the licensed market may well have gone into decline going forward.

In fact, Adams Research’s analysis of the 15 states in BDSA’s Tier 1 point-of-sale universe shows that they eked out a mere 4.5% growth rate in first-half 2025, with nine of the 15 (including most of the biggest ones—California, Michigan and Massachusetts) posting declines. Thus, even if the gains are less than the incremental $21 billion over four years suggested by this analysis, the hemp ban may have thrown the legal cannabis industry a much-needed lifeline. Just a month before H.R. 4121 forced a likely retreat over the next year by publicly traded retailers, mass merchandiser Target began rolling out THC-containing beverages in 10 Minnesota stores. E-commerce and delivery services were also piling into the hemp-derived market through the loophole in the 2018 Farm Bill.

Licensed operators were losing one of the few positives they have in their overly taxed and regulated industry: limited competition from America’s retail behemoths. As Charlie Bachtell, CEO of Creso Labs and chairman of the US Cannabis Roundtable trade group, told the IgniteIt conference, “All of us should be optimistic.”

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Three Days that Shook the Cannabis World

Tom Adams — Fri, 13 Feb 2026 17:00:00 +0000

BY THE NUMBERS

Three Days That Shook the Cannabis World

February 13, 2026

Editor’s note, April 24, 2026

This piece was published February 13, 2026. On April 23, the Department of Justice placed state-licensed medical cannabis into Schedule III immediately by administrative order; adult-use cannabis remains Schedule I pending a DEA administrative hearing that begins June 29.

The near-term 280E benefit is narrower than this analysis suggested — it applies only to medical-licensed revenue. Hence, the payback horizons in the MSO table should be read as floors, not ceilings, until the broader process completes.

What Happens Now That Washington Has Stepped In?

By Tom Adams

The half-century-old conflict between state and federal governments on cannabis policy came to a head on three days at the end of 2025.

On November 12 Congress banned hemp-derived cannabinoid products.
On December 15 the Supreme Court refused to hear Canna Provisions v. Bondi, the industry’s attempt to get courts to declare federal prohibition unconstitutional.
On December 18 President Trump signed an executive order (EO) directing his administration to expedite moving cannabis out of the Schedule I class of controlled substances and expand research into CBD.

Each event was important in itself; happening all at once they promise to transform the industry in 2026 and beyond. History will judge this the moment the three branches of the federal government came together to abandon their decades of inaction to seize a central role in regulating what is already a de facto legal market.

It’s probably too late to completely sideline the states, most of whom now have substantial cannabis-related taxes and fees they rely on. And, of course, voters themselves still have some power in America; their initiatives put the states in the central role in the first place. But Washington politicians are now at the table, and the bifurcated history of cannabis regulation in the US makes it clear that the stakes in this new game are enormous.

Federal Prohibition vs. State Legalization

The feds and the states went their separate ways on cannabis policy when President Nixon made “marihuana” the centerpiece of his War on Drugs in the early 1970s and then Oregon and 10 other states decriminalized possession by decade’s end. Reagan conservatism in the 1980s closed the fault line a bit, but the split blew wide open again when California voted to legalize medical sales in 1996 and Colorado and Washington voters approved adult-use sales in 2012.

With little budget available to hassle the 20% or so of American’s who regularly consume the plant, the Justice Department subsequently looked the other way for decades as 40 states legalized medical dispensaries and 24 states legalized adult-use stores. That state-licensed market hit $32 billion last year.

Congress took a baby step toward federal-level liberalization by allowing low-THC CBD products in the 2018 Farm Bill. Then it stood on the sidelines again for seven years while science and industry developed a hemp-derived cannabinoid market that eventually included plenty of psychoactive products and rivals the size of the state-licensed business.

Rescheduling: Huge and Meaningless at the Same Time

The EO on rescheduling is the most important late-2025 action in the short term. Prohibition’s most crippling financial impact would go away if a reluctant Drug Enforcement Administration follows its new marching orders and allows the move of cannabinoids to Schedule III of the Controlled Substance Act’s classification system.

That would, on the face of the statutory language, exempt operators from Internal Revenue Code section 280E which bars deduction of normal business expenses for those trafficking Schedule I and II substances (but see attorney Bob Hoban’s caution in Forbes that “The perception that Schedule III is a ‘silver bullet’ is…misleading”). That arcane IRC provision has yielded effective tax rates north of 50% of pre-tax income for licensed retailers.

In recent years, many of the biggest operators simply paid taxes as if 280E wasn’t in effect since, even with IRS interest and penalties accruing, the conserved cash was the most attractive financing they could get. Most of the public multi-state operators (MSOs) now have an “uncertain tax position” (UTP) weighing down their balance sheets, as shown in Zuanic & Associates’ 12/15 report “US MSOs: The S3 Math Upside”. They will see substantial tax savings going forward and may even start reporting after-tax net income, a rarity to date.

But for most large MSOs, UTPs represent a double-digit percentage of their market caps, and the taxman has seldom granted forgiveness of old debts when a company’s legal status changes. Hence, most of the MSOs face years of working off their UTP debts with their potential tax savings (see table). Green Thumb is the only large MSO facing a payback horizon less than a year long.

Top MSOs: Tax Debt & Years to Payback Post 280E Relief

Company	Market Cap ($M)	Tax Debt ($M)	Years to Payback*
Green Thumb	2,351	82	0.9
Vireo Growth	645	53	2.0
Glass House	824	34	2.1
Verano	612	348	2.3
Cresco Labs	674	165	2.4
Curaleaf	2,888	530	3.3
TerrAscend	349	141	3.7
Ascend Wellness	201	198	4.5
Trulieve	1,969	615	4.5
Jushi	156	172	5.7

*Years to work off UTP tax debts via potential tax savings. Source: Adams Research years-to-payback analysis of tax-savings estimates by Zuanic & Associates.

Rescheduling is not legalization, however, and it will have limited impact beyond providing the much-need after-tax margin boost. That’s why the MSOS ETF has already given back the lion’s share of the 78% gain it saw in the immediate aftermath of the EO, as investors came to grips with implications of the fact that the activities of state-licensed cannabis companies will still be federally illegal. Schedule III drugs require FDA approval, which would certainly not be forthcoming for most of today’s cannabinoid products. Few suppliers have the resources to pursue federal approval for more pharmaceutical-like goods, nor any motivation to do so unless states require it for continued licensure. Cannabinoid companies will not have access to the full range of traditional financing options until the federal position gels.

The Supreme Court Affirms Federal Power Over Cannabinoid Commerce

That’s because the state-licensed industry remains in the federal crosshairs given the Supreme Court’s earlier demurral to hear arguments in Canna Provisions v. Bondi. The case was probably quixotic from the start: an effort to get the federal government out of the cannabis regulation business altogether.

The plaintiffs argued the Controlled Substances Act unconstitutionally prohibits intrastate cannabis activity, contravening the Commerce Clause which limits federal control of markets to interstate commerce.

But precedent was against the industry: Dating back to Wickard v. Filburn in 1942 courts have allowed federal regulation of even trivial non-commercial intrastate activity (in that case, a single farmer growing his own cattle food) when it could conceivably affect interstate commerce. In 2005’s Gonzales v. Raich the principle had already been applied to cannabis (caregivers growing in their own homes), even though there is no legal interstate cannabis commerce to be affected. Lower courts had ruled against Canna Provisions and its partners in the suit, and by its demurral the Supreme Court let those rulings – and hence federal prohibition – stand.

The Hemp Ban: Congress Decrees Winners and Losers

Those late-2025 judicial and executive actions leave the legal fate of cannabinoids at the federal level up to Congress. In the short term, that looks like very bad news given its inaction all these years. For myriad reasons, hemp is the only area Congress has ever addressed, and that in directly contradictory fashion in 2018 and 2025.

Companies that jumped into the loophole created by the 2018 Farm Bill face unmitigated disaster if the new ban takes effect on schedule in November 2026. Even those marketing only CBD products could be shut down, given the challenges of growing and processing Cannabis sativa while keeping THC levels below the new 0.4%-by-weight limit. On the other hand, it’s good news in the near term for licensed cannabis companies, who are looking at a revenue upside if the hemp ban really does limit the availability of psychoactive Delta-8 THC, Delta-9 THC and THCa products at mainstream retailers (see “Did the Feds Just Double the Growth Rate of Legal Cannabis?”.

OK, DC Woke Up; Now What?

Now, the era of federal irrelevance (to cannabis) and schizophrenia (regarding hemp) is coming to an end. As with any government action in the economic arena, the question is “who will be the winners and losers?” For the overall cannabinoid market, the best outcome would clearly be the limited approach proposed by the newly formed One Plant Alliance: testing, labelling and age-verification laws, and nothing more.

Hemp had a regulatory baseline, prior to the November ban, that would be a far more business-friendly place to start: Adding federal-level testing, labelling and age-restriction standards to what was hemp’s basically free-market model would make for a far healthier industry than creating a hybrid federal-state regime based on the command-and-control policies that most states have imposed on licensed cannabis operators

In many ways, the cannabinoid industry will miss the days now ending when it grew stupendously while DC wasn’t paying attention. But there’s reason for hope: as that federal edifice of denial crumbles even strict prohibitionists are aware (though most will still only grudgingly admit) that:

Hemp and cannabis are the same plant
Many of its compounds have demonstrated medical uses, and more will likely prove out over time.
Whatever harms are found by science in the future, it will be damaging to the federal government’s credibility if mortal threats like alcohol and tobacco turn out to be more liberally regulated than cannabinoids.

There’s little doubt that the federal government’s involvement in cannabis will be hugely expensive for the industry. Beyond excise taxes and compliance costs, regulatory-capture costs (lobbying expenses, campaign contributions, etc.) are huge, but necessary, business expenses for federally regulated businesses. For cannabis and hemp companies alike, it will be the price of admission to the financial corridors of power. Commercial banks, stock exchanges and institutional investors will continue to stay away while federal prohibition remains absolute.

All the industry can do is hope it gets access to much-needed financial resources via not-too-onerous regulations like those the Bureau of Alcohol, Tobacco and Firearms enforces in its three areas of purview. If the cost of financial legitimacy is iron-fisted FDA regulation with it’s billion-dollar trials and decade-long approval processes, only a handful of legal cannabinoid companies would make the transition; most would disappear. Then cannabis consumers will just go back to doing what they did before – buying on the street and growing their own.

The current political balance of power is precarious for legal cannabinoids. Democrats are legalization’s natural proponents but have traditionally favored an active federal role dating back to the civil rights struggle of the 1960s. Republicans generally champion state’s rights, but many are knee-jerk prohibitionists on cannabis.

All we know for sure at this point is that there will be no going back from the three days in late 2025 that finally brought the federal government to the forefront of the cannabis legalization debate.

TOM ADAMS, president of Tom Adams Research, is the most experienced strategic consultant in legal cannabis. As founder of Adams Media Research, head of Industry Intelligence at BDSA, and CEO of Global Go Analytics Tom pioneered many of the analytical tools used to develop strategies in explosively growing new consumer product categories. He can be reached at tom@adamsresearch.net

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