rewrite this title and make it good for SEOWhat cannabis investors can expect in 2026 after marijuana rescheduling

(This is a contributed guest column. To be considered as an MJBizDaily guest columnist, please submit your request here.)

Cannabis investors are understandably optimistic heading into 2026 after President Donald Trump’s historic Dec. 18 executive order. Marijuana rescheduling may yet become the singular, transformative catalyst for cannabis equities to rally, but that’s only if Congress follows through and ensure federal reform finally arrives.

Investors should understand that rescheduling alone will not deliver a lasting re-rating of cannabis equities. To translate this historic step into sustainable, long-term gains, two other major advancements are needed.

The first is expanded institutional access to the sector, and the second is improving financial performance across operators.

Institutional investment will transform legal cannabis, if Congress makes it happen

Sustained equity appreciation requires more than enthusiasm and headlines. We need institutional capital, the most powerful source of incremental demand for shares in today’s markets. Yet most institutions remain effectively sidelined from U.S. plant-touching cannabis businesses.

That’s because custody, compliance, and listing restrictions prevent them from owning these securities at scale. That constraint sharply limits the investor base and caps the sector’s ability to attract long-term, fundamental investors.

The cannabis industry needs banking reform that includes a true safe harbor for exchanges, custodians and financial intermediaries. With the right protections in place via a SAFER Banking framework, pensions, mutual funds, endowments and insurance companies will finally participate in the sector.

This is all more likely to be achieved once cannabis is officially in Schedule 3 of the Controlled Substances Act.

Cannabis is officially recast as a legitimate medicine. 280E no longer applies. But it’s only in tandem with banking reform that cannabis can move from a trading market driven by retail investors to one anchored by genuine institutional ownership.

Cannabis companies must fix their fundamentals. Marijuana rescheduling will help.

Even if Congress swings the doors to institutional capital wide open, large investors will not simply buy the sector wholesale. They will focus on the fundamentals: on companies that deliver consistent earnings, clear cash-flow generation, strong balance sheets and credible, capital-efficient growth.

Many operators have struggled to consistently meet those standards at scale. Pricing pressure, competition from intoxicating hemp products and the costs of operating in a fragmented, state-by-state regulatory environment all squeeze margins and reduce cash flow.

Marijuana rescheduling immediately improves this outlook. The elimination of Internal Revenue Service Code 280E from cannabis companies’ list of worries is a material long-term benefit. It enhances after-tax profitability and reduces one of the most persistent distortions in cannabis financial statements.

In the near term, the impact may be muted because many operators have already stopped paying the tax. Over time, however, the removal of 280E will matter, particularly for companies that are growing, profitable and operating in multiple states.

The looming hemp THC ban and unanswered questions

A federal crackdown on intoxicating hemp products should also support the regulated cannabis market by removing some of the least controlled competitors – that is, if states also enforce the rules and avoid creating new loopholes.

With a one-year runway before certain products are prohibited in November 2026, hemp operators need to begin winding down long before the deadline. Retailers are unlikely to keep buying inventory right up to the cutoff. As a result, intoxicating hemp products are likely to recede from shelves gradually over the course of the year.

The hemp industry, however, will not simply disappear. A more realistic scenario is a short extension of several months while federal lawmakers and regulators work toward a cohesive framework for regulating all plant-derived cannabinoids.

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

Hemp regulations will also determine cannabis sector growth. As intoxicating hemp recedes and regulated cannabis regains pricing power at the margin, modest single-digit growth may return to the industry – particularly in new and emerging markets such as Virginia, Kentucky, Minnesota, Delaware and Ohio.

Liquidity will fuel a positive feedback loop

Cannabis stocks have historically traded with low daily volumes, making it difficult for institutions to build meaningful positions – and necessary liquidity – without moving prices against themselves. Rescheduling and SAFER may help boost valuations and broaden participation, but liquidity will not transform overnight.

Paradoxically, one of the most constructive developments could be a wave of equity issuance at higher prices. Operators may use improved valuations to raise capital, pay down debt, term out maturities and simplify complex capital structures.

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

This creates the potential for a reinforcing positive feedback loop. Rescheduling and banking reform support valuations. Higher valuations enable companies to fix their balance sheets. Stronger balance sheets attract more institutional capital – which in turn supports further valuation gains.

Expectations around mergers and acquisitions should be more muted. Each year brings predictions of a major M&A wave in cannabis. And so far, each year has mostly delivered tuck-in deals rather than transformative consolidation. That pattern may continue.

The realistic picture in 2026: A slow, steady build

Added together, these points all add up to a 2026 in which investors should expect a slow buildup rather than a speculative moonshot. Fundamentals will gradually improve as conditions become more welcoming and longstanding  barriers fall.

This remains a market for long-term thinkers, not short-term speculators. The companies best positioned to benefit will be those with disciplined management teams, strong balance sheets, efficient operations and the resilience to navigate the final stages of federal uncertainty.

While rescheduling will start the re-rating of cannabis equities, stronger fundamentals and broader institutional access will be what ultimately finishes it.

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