What cannabis growers can expect in 2026 after marijuana reform

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Marijuana investors are understandably optimistic about the outlook for 2026 after President Donald Trump’s landmark order of December 18. Marijuana reform can still be a singular, dynamic promoter of cannabis statistics, but that’s only if Congress follows through and ensures that government reform comes to an end.

Investors should understand that restructuring alone will not bring about a permanent re-rating of cannabis stocks. To translate this milestone into sustainable, long-term benefits, two other major developments are needed.

The first is the expanded reach of the institution in the sector, and the second is to improve the financial performance of all operators.

The agency’s investment will legalize marijuana, if Congress makes it happen

Appreciating sustainable equity requires more than enthusiasm and topics. We need institutional capital, the most powerful source of growing demand for stocks in today’s markets. Yet many institutions remain effectively sidelined in the American cannabis business.

That’s because maintenance, compliance, and listing restrictions prevent them from owning these securities at scale. That feature significantly narrows the investor base and limits the sector’s ability to attract long-term, significant investors.

The cannabis industry needs banking reform that includes a real safe harbor for exchanges, custodians and financial intermediaries. With the proper protection available through a safe Bank structure, pensions, mutual funds, endowments and insurance companies will eventually participate in this sector.

This is most likely to be achieved once cannabis is legalized in Schedule 3 of the Controlled Substances Act.

Cannabis is being legalized again as a legal medicine. 280E is no longer valid. But it is only with banking reforms that cannabis can move from a trading market driven by retail investors to one supported by real institutional ownership.

Marijuana companies need to get their foundations right. Reprogramming marijuana will help.

Even if Congress opens the doors to institutional capital, big investors won’t simply buy the sector wholesale. They will focus on the fundamentals: companies that deliver consistent earnings, clear cash flow generation, strong balance sheets and reliable, cost-effective growth.

Many operators have struggled to meet those levels of scale. Price pressure, competition from hemp products and the cost of operating in a fragmented, state-by-state regulatory environment have all sidelined and reduced cash flow.

Rapidly reprogramming cannabis enhances this idea. The elimination of Internal Revenue Service Code 280E listing of cannabis companies is a long-term benefit. It improves after-tax profits and reduces the most persistent misstatements in cannabis financial statements.

In the near term, the impact may be muted because many operators have stopped paying taxes. In the long run, however, the removal of 280E will be important, especially for companies that are growing, profitable and operating in many states.

The upcoming ban on THC in hemp and unanswered questions

State crackdowns on intoxicating hemp products should also support a regulated cannabis market by removing some of the less regulated competitors — that is, if states enforce the laws and avoid creating new loopholes.

With a one-year runway before certain products are banned in November 2026, hemp operators need to start bending long before the deadline. Retailers are less likely to keep buying inventory until it runs out. As a result, alcoholic hemp products are likely to retreat from the shelves gradually over the course of the year.

The hemp industry, however, won’t just disappear. A more reasonable scenario is a short extension of a few months while lawmakers and regulators work on a unified framework to regulate all plant-derived cannabinoids.

Any extension is likely to be combined with visible progress. Policymakers will not be eager to extend the status quo indefinitely while children can still buy energy products at gas stations and convenience stores.

Hemp laws will also determine the growth of the cannabis industry. As intoxicating hemp declines and controlled marijuana regains pricing power at the margins, modest single-digit growth may return to the industry — especially in new and emerging markets like Virginia, Kentucky, Minnesota, Delaware and Ohio.

Liquidity will stimulate a positive feedback loop

Marijuana stocks have historically traded in low daily volumes, making it difficult for institutions to build meaningful positions — and the necessary funds — without moving prices. Restructuring and SAFER can help increase rates and increase participation, but paying money won’t change overnight.

Ironically, one of the most positive developments could be a wave of dividend issuance at higher prices. Users can use advanced rates to raise money, pay off debts, settle maturities and simplify large complex structures.

Although dilution is never popular, strengthening balance sheets can improve a company’s value as an investment target. Over time, that could justify higher valuation multiples and attract long-term investors.

This creates opportunities to reinforce positive feedback. Restructuring and support measures for banking reforms. Higher leverage enables companies to repair their balance sheets. Stronger balance sheets attract more capital for an institution – which in turn supports more leverage benefits.

Expectations regarding mergers and acquisitions should be greatly tempered. Each year brings predictions of a huge wave of M&A in cannabis. And so far, each year has brought mostly tuck-in deals instead of flexible bundles. That pattern may continue.

The real picture in 2026: A slow, steady build

Taken together, these points all reach 2026 when investors should expect a slower build than the projected monthly figure. Priority will gradually improve as conditions become more acceptable and long-standing barriers fall.

This is still a market for long-term thinkers, not short-term speculators. The companies best positioned to benefit will be those with disciplined teams, strong balance sheets, operational efficiency and the resilience to navigate the final stages of the regime’s uncertainty.

While restructuring will begin the rebalancing of cannabis shares, strong foundations and a broad institutional reach are what will finish it.

Anthony Coniglio is president, CEO and board member of Connecticut-based NewLake Capital Partners, an internally managed real estate investment trust. He can be reached at info@newlake.com.