Taken together, their arguments point to a two-track reality. Public-market cannabis M&A remains constrained. At the same time, quieter, private and credit-led consolidation is steadily reorganizing the industry.

How Consolidation Happens When Cash Disappears

Osak’s starting point is definitional. This debate, he writes, is not about “day-to-day, smallish M&A,” but about whether 2026 brings a wave of “significant M&A,” meaning deals large enough to influence revenues, market structure and long-term business performance.

By that standard, he sees little evidence of an impending surge.

Between 2022 and 2025, the number of active federal cannabis licences in Canada remained broadly stable, sitting at roughly 900 at various points even as the mix of active versus inactive licences shifted materially. Over that same period, the active-to-inactive ratio compressed from roughly 7:1 to about 2:1, reflecting a rise in inactive, surrendered, expired and revoked licences in Health Canada’s data. Osak estimates that fewer than 5% of those exits were tied to M&A, with most occurring through closures and license inactivations.

Consolidation still occurred.

That pattern challenges a common assumption in U.S. cannabis. Market shakeouts do not require mergers. They often happen through attrition, closures and selective asset transfers, particularly in fragmented and overbuilt industries.

Why Schedule III Is Not The Catalyst Many Expect

Federal rescheduling to Schedule III has become a focal point in this debate because it could change the industry’s tax math. Rescheduling, however, would not legalize cannabis federally, resolve past criminal justice harms, or eliminate the broader legal conflicts between state markets and federal law.

Under a long-standing IRS rule known as Section 280E, cannabis businesses have been barred from deducting most ordinary operating expenses, a penalty tied to cannabis’s current Schedule I status. If cannabis is moved to Schedule III, 280E should no longer apply, as Hirsh Jain, J.D. has explained, though the timing and scope of that relief would ultimately depend on IRS guidance and interpretation. For some operators, that could materially improve after-tax cash flow.

Osak is explicit in pushing back on the idea that rescheduling alone unlocks a deal wave. “Rescheduling has no mechanisms to facilitate the entry of M&A-enabling equity capital or boost the availability of traditional credit,” he writes, noting that much of the industry would still sit outside the FDIC-regulated banking system. In other words, Schedule III is not the SAFER Banking Act, proposed legislation that would provide federal protections for banks and financial institutions serving state-legal cannabis businesses and it does not solve core capital-market frictions such as custody, uplisting or interstate commerce.

He also stresses that rescheduling will not benefit all operators equally. Some companies with operating income may see improved profitability. Others, particularly those still losing money, will not be rescued by tax reform alone. As Osak puts it:

“A bad business will remain a bad business”

There is also the unresolved issue of uncertain tax positions. Many operators still face potential liabilities related to years of unpaid 280E taxes, interest and penalties. Osak describes this overhang as a “Sword of Damocles” hanging over balance sheets and deal planning.

Yakatan does not dispute these constraints. His argument is narrower. Schedule III does not unleash capital, but it does normalize internal math. By removing 280E distortions, cash flows become easier to model, EBITDA becomes more meaningful and deals can be underwritten with fewer assumptions. That shift, he argues, creates permission for disciplined transactions, even if it does not generate broad enthusiasm.

Where Dealmaking Actually Moved

The most important divergence between public perception and on-the-ground reality is where M&A is occurring.

Public MSOs remain constrained by low equity valuations, dilution sensitivity and refinancing priorities. Stock-heavy deals are unattractive to sellers, and, as detailed above, cash consideration is rare.

Yakatan argues that this environment has not stopped consolidation: It has changed its mechanics.

“The early wave of the cannabis tsunami will be driven by structures, not by sentiment,” he writes. Instead of large cash acquisitions, deals increasingly rely on all-stock consideration, earnouts, seller rollovers and credit-based control.

He points to Vireo Health as a real-time example of how this model works. Over the past year, Vireo raised approximately $75 million in equity and announced acquisitions totaling roughly $397 million in consideration, largely structured as stock with performance-based earnouts. It later acquired senior secured convertible notes tied to Schwazze with a face value of about $91 million for roughly $62 million, a discount of around 30%. Yakatan characterizes that transaction as “credit-as-control,” rather than traditional M&A.

Additional transactions followed. Vireo acquired certain Colorado assets for approximately $49 million through a mix of shares and assumed liabilities, adding 17 retail locations and increasing its footprint to 41 dispensaries. It later agreed to acquire Eaze in an all-stock deal valued at about $47 million, gaining retail presence, technology infrastructure and cultivation capacity.

The specifics matter less than the pattern. These are not splashy mergers. They are structured, opportunistic transactions designed to preserve cash, manage risk and retain optionality.

Why Private Capital Moves First

Osak and Yakatan ultimately converge on a key point. Public companies are poorly positioned to lead the next phase of cannabis consolidation. Private operators are not.

Founder-led businesses often have cleaner balance sheets, simpler governance and faster decision cycles. Family offices and credit funds are more comfortable underwriting regulatory complexity in exchange for control and long-term positioning. Earnouts and equity rollovers replace cash. Integration risk is priced into structure.

Osak frames the current moment as a rationalization phase rather than a growth cycle. North American cannabis, he writes, is shedding excess capacity and culling weak operators. Historically, that phase precedes durable consolidation, but rarely through headline deals.

What This Means For 2026

If a cannabis M&A wave arrives, it is unlikely to resemble the speculative surge of the last decade. Osak expects most transactions to remain small, focused and low risk, what he calls “singles-type deals, not grand slams.” Yakatan agrees, arguing that by the time consolidation becomes obvious, the most attractive assets will already be locked into private platforms.

M&A in cannabis is not dead. It has morphed. Those waiting for a public-market signal may miss the quieter restructuring already reshaping the industry.