Cannabis Stocks in 2026: What the Last Five Years Have Taught Us

By early 2026, cannabis stocks no longer feel like a frontier market driven by boundless optimism. They look more like a case study in what happens when early hype collides with regulatory friction, capital misalignment, and the slow discipline of fundamentals. The past five years have been brutal for investors, but they have also been clarifying. Understanding that arc is essential to making sense of where cannabis equities may actually go in 2026—and whether the coming year will finally bring some relief to worn-out investors.

From Green Rush To Reality Check

After Canadian legalization and the first wave of adult-use state legalizations, easy capital and speculative fervor sent cannabis equities soaring, only for valuations to collapse as revenues failed to match projections and profitability remained elusive—largely because federal reform stalled in the U.S. Many of the companies that promised to shape the new era of legal cannabis lost 80–90 percent of their market value over the following years, as business models built for rapid expansion proved fragile once capital tightened and margins compressed.

In the U.S., federal prohibition kept plant-touching companies locked out of major exchanges and traditional banking, forcing them into higher-cost capital structures and punitive tax treatment under Section 280E and state and local excise tax obligations. In Canada, legalization came with rapid capacity build-outs, but retail rollout lagged, the illicit market persisted, and oversupply crushed prices. Across both markets, thin liquidity and a retail-focused shareholder base made cannabis stocks exceptionally sensitive to headlines, producing violent rallies followed by equally sharp reversals.

Canadian Leaders: Smaller, Leaner, Still Searching

The Canadian licensed producers that once symbolized cannabis’s promise have spent the last five years redefining their strategies. For instance, Canopy Growth, once valued above C$20 billion, has since closed facilities, exited non-core businesses, and focused on reducing debt and operating losses. Aurora Cannabis followed a similar trajectory, expanding aggressively through acquisitions before retreating toward higher-margin medical cannabis and exports.

Tilray Brands illustrates a different response. Through consolidation and diversification, Tilray built a global footprint and supplemented cannabis revenue with alcohol and consumer products. Yet even with scale, cannabis revenues have stagnated, and large impairment charges have weighed on results. The stock saw dramatic swings in 2025, fueled by U.S. reform rumors.

U.S. MSOs: Scale Under Constraint

While Canadian firms dominated early narratives, U.S. multi-state operators quietly built a large, multi-state-legal industry under federal constraints. These companies generate billions of dollars in revenue, operate hundreds of dispensaries, and in some cases produce consistent operating profits, yet their stocks remain confined to OTC markets or Canadian exchanges.

Among them, Green Thumb Industries stands out for financial discipline. By focusing on limited-license states and maintaining balance-sheet control, Green Thumb has delivered sustained operating profitability since 2020, a rarity in cannabis. Its valuation, however, still reflects the same constraints facing all MSOs, including limited liquidity, high taxes, and restricted access to institutional capital.

Trulieve Cannabis built a different model, centered on deep dominance in the Florida market and supplemented by expansion elsewhere. Its future is closely tied to Florida’s regulatory path, illustrating how state-level policy outcomes can dramatically reshape equity value in cannabis.

Other MSOs such as Curaleaf, Cresco Labs, Verano, and TerrAscend have pursued varying strategies, from national scale to selective state focus, but all share the same paradox: large operating businesses whose equity valuations remain compressed by federal law. That tension was partially released in 2025 when, on expectations of U.S. rescheduling, MSO stocks surged sharply, with sector indexes posting triple-digit quarterly gains.

By early 2026, cannabis stocks trade at valuations that would look inexpensive in almost any other high-margin industry. Median EV/EBITDA multiples for U.S. operators sit in the mid-single digits, even as reported margins often exceed 25 percent. The discount reflects embedded risks such as tax friction, capital costs, regulatory uncertainty, and limited exit optionality. Could this mean the market is being especially hard on public cannabis companies that failed to fulfill early promises? And if so, is there a renewed investment opportunity in cannabis?

Bear in mind, if U.S. multi-state operators were able to operate freely at the federal level, the impact on valuations would be considerable. For instance, the ability to list on major U.S. exchanges would expand liquidity, attract institutional investors, and compress the persistent valuation discount that has little to do with operations and much to do with market access.

Over time, these changes would likely support higher and more stable valuation multiples for the strongest operators, particularly those with defensible positions in limited-license states and demonstrated cost discipline.

2026: Turning Point Or Another Mirage?

As of early 2026, cannabis equities sit in an unusual and somewhat unresolved position. Valuations remain compressed, yet no longer feel purely distressed.

Balance sheets are generally cleaner, cost structures tighter, and expectations far more restrained than during the peak years of speculative excess.

Since equity prices continue to reflect unresolved structural issues, most notably federal illegality in the U.S., uneven and punitive state tax regimes, a relatively unrestrained illicit marketplace, and constrained access to institutional capital, today’s valuations appear less like a verdict on the industry’s viability and more like a placeholder while policy, capital markets, and operating realities slowly realign.

Looking forward in 2026, it is useful to think less in terms of predictions and more in terms of pathways. One path involves federal rescheduling in the U.S., which would improve after-tax cash flow, reduce financing costs, and potentially allow broader market participation without immediately resolving all structural inefficiencies.

Another path involves states continuing to raise excise taxes or tighten regulatory enforcement, which could further pressure margins and prolong equity underperformance even in a growing market.

A third path combines partial reform with continued fragmentation, producing selective winners rather than a broad-based re-rating of the sector. Each of these outcomes carries different implications for earnings quality, capital access, and valuation stability, underscoring why cannabis equities remain sensitive to policy design.

And Then There’s Europe

Beyond North America, European cannabis equities add another layer of opportunity. Europe’s market remains smaller, more medically oriented, and more tightly regulated, but it is also structurally different from the U.S. and Canada, with clearer federal frameworks and fewer capital-market contradictions.

While recent pullbacks in large-scale adult-use ambitions—particularly in Germany—have tempered expectations, medical cannabis markets across Germany, the UK, and parts of Southern Europe continue to expand steadily.

A Market In Transition

Looking ahead, 2026 holds the possibility of real inflection. U.S. rescheduling could lower tax burdens, ease banking access, and eventually enable uplistings, which would likely attract institutional capital and reprice equities. For the first time, some MSOs could report normalized net profits.

At the same time, risks remain. Implementation may be slow, interstate commerce will remain restricted, and increased competition within the industry and with illicit competitors could compress margins further. Consolidation is likely to accelerate, rewarding scale and efficiency while punishing weaker balance sheets.

As the cannabis sector moves into its next phase, the question for investors and operators alike is which businesses are structurally positioned to endure as regulation, capital, and competition evolve and we transition into a more institutionalized, more mature cannabis market.

At Verdant we work with cannabis companies and investors to navigate that intersection—translating regulatory change, financial structure, and market dynamics into clearer strategic and valuation decisions. In a market that is still volatile but increasingly mature, clarity, discipline, and credible financial analysis are what separate momentary rallies from lasting value.