Capitalizing on Cannabis Policy Shift: Two Profitability-Focused Pot Stocks in 2026

The regulatory landscape for cannabis investments shifted dramatically in December 2024 when the Trump Administration issued an Executive Order directing the Attorney General to reclassify marijuana from Schedule 1 to Schedule 3 status. While bureaucratic procedures will delay implementation, this development signals a pivotal moment for the industry. Beyond policy, several states—including Pennsylvania, Florida, Virginia, and Minnesota—are advancing adult-use legalization, creating a broader tailwind for cannabis businesses. Among publicly traded companies in this space, two stand out for their profitability: Green Thumb Industries and NewLake Capital Partners, each offering distinct paths for investors seeking exposure to this emerging sector.

Federal Cannabis Rescheduling Opens Door to Higher Profit Margins

The Schedule 1 to Schedule 3 reclassification carries significant financial implications. Currently, cannabis businesses cannot deduct standard operating expenses under Internal Revenue Code Section 280E. If rescheduled, these companies would be able to write off payroll, rent, marketing, and other overhead costs—a change that would substantially improve profit margins across the industry.

Beyond federal policy, state-level expansion is accelerating. Pennsylvania and Florida, two of America’s largest medical-cannabis markets, are approaching the launch of adult-use sales programs. Virginia and Minnesota are similarly positioned for expansion, while other states continue broadening their existing medical and limited-use frameworks. This multi-state growth creates compounding opportunities for well-positioned operators.

Direct Cannabis Operations: Green Thumb’s Path to Sustained Profitability

Green Thumb Industries exemplifies the rare cannabis company that has achieved consistent profitability. Operating 108 RISE dispensaries across 14 states, the company is on track for its eighth consecutive year of revenue growth. In the third quarter, Green Thumb reported revenue of $291 million, representing 1.6% year-over-year growth. While retail dispensary sales declined 1% period-over-period, packaged goods revenue surged 8%, driven largely by new sales channels in New York and Ohio.

The company’s earnings profile reflects this operational strength. Third-quarter earnings per share reached $0.10, double the $0.04 EPS reported in the same quarter of 2024. This improvement demonstrates that even in a challenging regulatory environment, disciplined operators can drive bottom-line growth. Green Thumb’s diversified revenue streams—combining direct retail sales with packaged goods distribution to other cannabis retailers—reduce dependence on any single market or sales channel. The company’s portfolio of established brands provides competitive insulation in an unpredictable sector.

Like most cannabis operators, Green Thumb faces the industry’s characteristic challenge: thin profit margins. However, the company maintains higher profitability than most pure-play competitors, positioning it to benefit most directly from federal rescheduling and the resulting IRC 280E relief.

Real Estate Play in Cannabis: NewLake’s High-Yield Strategy

NewLake Capital Partners takes a fundamentally different approach, functioning as a real estate investment trust (REIT) specializing in cannabis industry properties. The Connecticut-based firm owns and leases 34 properties—15 cultivation facilities and 19 dispensaries—across 12 states to cannabis operators. Its triple-net lease structure places most operating costs on tenants, providing NewLake with highly predictable cash flows.

A defining feature of NewLake is its dividend profile. REITs must distribute at least 90% of taxable income to shareholders, and NewLake has increased its dividend by 79% since its 2021 initial public offering. The current quarterly dividend yield stands at 11.47%. What distinguishes NewLake is that this seemingly aggressive yield is sustainable—the company’s adjusted funds from operations (AFFO) payout ratio is 82%, well within prudent REIT safety guidelines. For context, its main competitor, Innovative Industrial Properties, operates at a 90% AFFO payout ratio, indicating NewLake’s distributions are more secure.

Third-quarter financial metrics support this stability. NewLake reported $12.6 million in quarterly revenue, up 0.3% year-over-year, while AFFO per share rose 2% to $0.52. The company also maintains a strong balance sheet: approximately $8 million in debt and over $24 million in cash, providing flexibility for expansion.

One structural risk merits attention: Curaleaf, one of NewLake’s major cannabis tenant operators, represents 24.1% of the property portfolio. This concentration creates exposure if Curaleaf experiences financial stress. However, NewLake’s diversified tenant base of 12 different operators and strong cash generation provide cushioning.

Growth vs. Income: Choosing Your Cannabis Investment Strategy

Green Thumb and NewLake represent two fundamentally different cannabis investment theses. Green Thumb offers direct exposure to cannabis cultivation and retail operations. The company stands to capture the most significant benefits from federal rescheduling—margin expansion, improved cash generation, and potential re-rating as profitability becomes normalized. For investors seeking capital appreciation and growth, Green Thumb presents the higher-upside opportunity, particularly if federal policy reforms accelerate.

NewLake operates as a more defensive income vehicle. While it has experienced a pullback in recent valuations, total return performance—when accounting for dividend distributions—has been substantially more resilient. As cannabis operators achieve healthier margins, their ability to service lease obligations strengthens, reducing tenant risk and supporting NewLake’s dividend sustainability. The 11.47% yield provides investors a compelling return stream while waiting for broader industry sentiment to improve.

Making Your Cannabis Investment Decision: Key Considerations for 2026

The choice between these positions depends on your investment objectives and risk tolerance. Green Thumb appeals to growth-oriented investors betting on federal rescheduling and cannabis market normalization. If Schedule 3 status becomes effective and IRC 280E restrictions lift, the company’s earnings could expand meaningfully, driving stock appreciation.

NewLake suits income-focused investors seeking higher current yield and downside protection through dividends. The REIT’s performance is less dependent on dramatic policy shifts and more tied to steady real estate rental streams and operator stability.

Both companies have demonstrated profitability in an industry where most peers operate at losses—a critical advantage as regulation evolves. The pot.hub investment opportunity isn’t picking a single winner, but rather positioning across complementary exposure to cannabis sector growth: operational upside through Green Thumb and cash-generative, income-producing real estate through NewLake.