M&A activity in the cannabis sector remains subdued compared to the high-growth era of the early 2020s. However, a careful resurgence is in motion. Capital raising—especially via debt—is accelerating, though the looming wave of loan maturities in 2026 presents a clear risk. Strategic acquisitions are being pursued, but predominantly by well-capitalized firms targeting distressed or regional assets.

Institutions are looking for high-quality, operationally sound targets—particularly in cultivation, retail, and infused products—while preferring sale-leaseback and debt-light transaction structures. At the same time, wholesale price volatility, state regulatory complexity, and ongoing margin pressure are compelling firms to adopt a more disciplined, fundamentals-first approach.

There are burgeoning signs that regulatory catalysts—particularly those emanating from federal authorities—could rekindle dealmaking momentum. Most notably, the Trump administration is actively considering reclassifying marijuana from Schedule I to Schedule III under the Controlled Substances Act—a potential shift that, if enacted, would significantly reduce federal prohibition’s grip without establishing full legalization. Such a rescheduling move could transform the M&A calculus. It would relieve businesses from the crippling tax burdens imposed by IRS Section 280E, possibly unlock access to traditional banking services, and expand avenues for investment and research. These changes could pave the way for greater capital market engagement and strategic consolidation, especially if paired with more predictable regulatory norms.

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“Healthcare organizations are both interested and hesitant when it comes to AI.” R. Lance Boldrey Dykema Member

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