Industry Context And Consolidation

The collapse has forced both investors and advisors to rethink what sustainable growth in cannabis looks like.

Seth Yakatan, an investor and longtime industry advisor, cautions against the idea that mergers alone will save struggling operators. “De-leveraging must occur and profitable growth must occur. Catalyst states still provide upside,” he said in an interview.

But the barriers are structural. Legal operators, Yakatan noted, remain hemmed in by the illicit market and limited household penetration. He estimates California’s legal market at about $4 billion annually, with the illicit trade of similar size. Pointing to Hoodie Analytics’ benchmark of roughly $800 in annual household spend for cannabis, he added that if California hit that level of penetration, “the market could approach $12 billion.”

Sandy Li, a partner at Viridian Capital Brand Advisory practice, echoed that survival depends less on size and more on strategy. “The brands still earning consumer loyalty are those that invested in differentiation,” she said. “With flower increasingly commoditized, it is not enough to compete on price. Instead, companies are holding ground by focusing on quality, authentic storytelling, consistent customer experiences and innovation.”

That dynamic is especially visible in certain categories. “Infused pre-rolls, solventless concentrates, edibles and beverages are all capturing share,” Li added. “For example, according to Hoodie Analytics, unit sales of pre-rolls has exceeded vape unit sales in the U.S. for the first time. The global edibles market alone is expected to grow from $14.8 billion in 2024 to $48.7 billion by 2030. Products featuring CBN, CBG and other cannabinoids are expanding the consumer base beyond recreational users, with wellness-focused categories projected to grow at ~22% CAGR through 2030.”

Policy Tailwinds Offer Limited Relief

Even as operators retrench, federal policy remains a critical (and unpredictable) variable. The industry is still waiting for clarity on rescheduling: moving cannabis from Schedule I to Schedule III would reduce the crushing burden of IRS Code 280E and unlock research pathways.

President Donald Trump has also hinted at a different, health-framed approach. In late September, he reposted a polished video urging Medicare coverage of hemp-derived CBD, calling it “the most important senior health initiative of the century.” The post sent cannabis stocks jumping, a reminder of how closely investors are watching Washington for signals. For many, it suggested Trump may view cannabis reform less through a cultural or criminal-justice lens and more through healthcare cost savings, a path that could prove politically safer.

What Rescheduling And 280E Relief Could Change

Still, industry advisors caution that no single policy change will erase the sector’s structural challenges. Yakatan sees rescheduling as helpful but limited. “For those in pure retail, this will help a lot, as if 280E goes away, they get a 20%-ish lift to profits,” he said. He noted that many MSOs have accrued 280E liabilities and may not see a dramatic near-term change in cash flow, while product companies may experience less impact. “It helps, but I am not sure it is the magic wand that wipes away the sins of too many debts and not enough profits.”

Yakatan added that hemp remains an open question: “My crystal ball is dark on how legal changes will manifest.”

Li agreed that the sector must avoid chasing headlines. In her words, three fundamentals remain non-negotiable: “tracking gross margin per unit, tightening working capital management and enforcing strict cost controls.” She warned that expansion for its own sake is no longer rewarded and stressed that “every dollar of Capex needs a clear, near-term path to return.”

Private Operators Expanding Strategically

Not all cannabis companies are shrinking. A handful of private operators continue to grow, largely by emphasizing discipline, niche strategies and diversification.

Sun Theory

Austin-based Sun Theory has expanded from one state in 2021 to multiple states today, with revenue rising from $2.8 million in 2021 to nearly $30 million in 2024. The company projects $70 million in revenue for 2025, spanning dispensaries, hemp and cannabis manufacturing, and consumer wellness brands.

In August 2025, Sun Theory ranked No. 644 on the Inc. 5000 list of America’s fastest-growing private companies, reflecting more than 650% growth since 2021. CEO Connor Oman said the company prioritizes profit over scale: “We enter only those jurisdictions where the rules are intelligible and the margin structure is attractive. That means focusing on asset-light, brand-driven businesses while sidestepping the risks of large-scale cultivation.”

Sun Theory reports EBITDA margins above 40%, a gross margin of 66%, and consistent cash distributions to limited partners. It has also signaled international ambitions, targeting Europe, Australia and South Africa.

Bud & Mary’s

Midwestern operator Bud & Mary’s has taken a different path, focusing on research-driven cultivation and sustainability. According to internal company data, revenues grew from $9.3 million in 2020 to $24.8 million in 2024. By mid-2025, revenue stood at $12.3 million, putting the company on track to at least match prior-year performance.

Units sold nearly doubled over four years, from 438,000 in 2020 to almost 960,000 in 2024. Market tracker Hoodie ranked Bud & Mary’s fourth in Colorado sales in late 2024; by mid-2025, it had climbed to the number two spot.

True Terpenes

Growth is not limited to plant-touching operators. Oregon-based True Terpenes has scaled by positioning itself as an ancillary supplier focused on diversification and resilience. CEO Daniel Cook explained: “There’s no single point of failure in our model, and that’s by design. The cannabis market is too volatile to bet on one path, so we focus on resilience through diversification. We keep our innovation pipeline full, tracking trends in taste, aroma and function to help our clients stand out.”

Cook added that True Terpenes “operates where sensory science and hedonics meet market relevance,” and highlighted that its toxicology work has been adopted by ASTM as part of its global standards framework. Looking across the downturn, Cook sees ancillary companies as bellwethers for the broader market: “We power over $8 billion worth of the most exciting cannabis products each year, giving us a unique vantage point into what’s actually working across form factors, cultivars and sensory trends.”

He emphasized reliability as a competitive edge: “We’re shipping our innovations in 0.7 days on a 2-day SLA, consistently. That reliability gives our clients a competitive advantage.”

Signs of Resilience: Cannabis Companies On The 2025 Inc. 5000

The Inc. 5000 list provides a snapshot of private companies showing rapid growth, even in cannabis, though it can sometimes reflect expansion from small bases. Several cannabis-linked firms earned spots in 2025, proving that growth is still achievable despite industry-wide pressure:

• The Flowery: Florida- and New York-based retailer with 21 storefronts and delivery.
• Cannatrol / VT Dry & Cure Technologies: Vermont-based drying and curing tech provider.
• Sorting Robotics: Automation and AI-driven pre-roll hardware.
• RollPros: Joint-rolling technology innovator.
• True Terpenes: Precision terpene supplier.
• CannaPlanners: Vermont-based cannabis marketing and SEO agency.
• Green Check: Banking/fintech platform processing over $1B in monthly deposits (2024).
• Green Leaf Business Solutions: HR and payroll services for cannabis operators.
• Silver Therapeutics: Community-focused dispensary group in the Northeast.

Still, Seth Yakatan cautioned against reading too much into ancillary momentum: “Many of the businesses in this vertical exist only because of the constraints which are placed upon the cannabis sector. As such many of them have a long-term sustainable competitive advantage for durable growth. If or when the walls fall down more established companies will enter the fray. Tell me Oracle or Net Suite, Visa or Mastercard do not show up the day the walls fall down?”

Yakatan also pointed to a list of brands he sees executing well despite the headwinds — from Stiiizy and Embarc to Wyld, Kiva, Jeeter and Uncle Arnie’s — while stressing that long-term success will come down to profitability and discipline.

Key Considerations

These examples highlight that growth is possible, but it comes with caveats: many of the fastest-growing firms are scaling from small bases and sustainability remains unproven. Against that backdrop, a few large public operators have still managed to post real gains.

Public Companies Maintaining Growth

While private players are carving new paths, a handful of publicly traded operators continue to show measured growth. Their financials highlight how rare, and fragile, expansion can be in today’s market.

Green Thumb Industries

Chicago-based Green Thumb Industries (GTI) remains one of the largest U.S. multi-state operators, with more than 100 dispensaries in 14 states and 20 cultivation-manufacturing facilities.

In 2024, the company generated $1.1 billion in revenue, up 7.8% from 2023, according to its annual report. While many peers have reported losses, GTI has remained cash-flow-positive, supported by a disciplined capital expenditure strategy. Its RISE retail chain spans states from Nevada to Minnesota, positioning the company to benefit from new adult-use rollouts.

In Q1 2025, GTI reported $280 million in revenue, essentially flat versus the prior year, while in Q2 revenue grew 4.7% year-over-year to $293.3 million, with $56 million in operating cash flow. GTI has shown resilience, maintaining cash-flow positivity while peers have reported steep losses, though its growth has been incremental rather than explosive.

Trulieve

Trulieve reported full-year 2024 revenue of $1.2 billion, up ~5% year-over-year, driven by a 5% quarterly gain and record cash flow from operations.

In Q1 2025, the company maintained momentum, generating $298 million in revenue, achieving 62% gross margin, and producing $51 million in operating cash flow. In Q2, it posted $302 million in revenue with adjusted EBITDA up year over year.

Still, the gains have been moderate, and like peers, Trulieve remains vulnerable to pricing pressure and federal uncertainty.

Vireo Growth And Deep Roots Harvest

In June 2025, Minnesota-based Vireo Growth completed a $132.7 million acquisition of Nevada operator Deep Roots Harvest, part of a broader $397 million multi-state consolidation.

Vireo reported fiscal 2024 revenue of $99.4 million, up 15.4% YoY and ended the year with $91.6 million in cash.

In Q1 2025, it posted $24.5 million in revenue a modest 1.9% increase, while pro forma projections for Q2 (post-merger) called for $90.7 million in revenue and $23.2 million in adjusted EBITDA. Yet, much of its 2025 momentum comes from acquisitions, underscoring both opportunity and execution risk.

^{Author’s note: These examples, however, are the exception rather than the rule in an industry where most operators remain under severe stress.}

Selective Growth In A Shrinking Market

Even as the broader U.S. cannabis sector contracts under financial and regulatory pressure, a handful of operators are proving that growth is still possible. Those that emphasize measured expansion, diversified portfolios and strong balance sheets are scaling nationally despite headwinds. Whether private operators like Sun Theory and Bud & Mary’s, or public companies like Vireo and GTI, the examples suggest opportunity remains, though it is selective, not universal.

Li framed the shift: “The industry is moving out of its early, expansion-driven phase into a more rational, consumer-focused era. Durable leaders will be defined not by scale alone, but by operational discipline, capital efficiency and consumer experience and trust.”

Investor Outlook

Yakatan sees upside if policy change arrives. “I still believe there is 50% to 100% upside in many names based upon some form of Federal change,” he said, adding that strategic capital is most likely to target lower-middle-market private companies in the $25 million to $250 million revenue range.

Li countered that investors must remain disciplined. “Expansion for its own sake is no longer rewarded. Every dollar of Capex needs a clear, near-term path to return. This financial rigor is the foundation for sustaining growth even in turbulent markets.”

Both cautioned against extrapolating too much from “fastest-growing” lists. Many operators are scaling from small revenue bases, and maintaining momentum amid high debt, unsettled regulation and falling prices will be difficult. The shakeout, however, is forcing a reset; one that may ultimately reward those who combine strong fundamentals with patience.