Anthony Coniglio (Courtesy photo)
(This is a contributed guest column. To be considered as an MJBizDaily guest columnist, please submit your request here.)
The U.S. cannabis industry has spent years waiting for a single catalyst from the federal government to change its trajectory. Investors have watched for banking reform, rescheduling, federal legalization and tax relief as though one event might suddenly erase the barriers that have kept traditional capital on the sidelines.
After more than three decades in capital markets, I do not think industries mature that way. Capital tends to move when a series of risks become measurable, familiar and ultimately manageable.
Cannabis is finally beginning to enter that phase.
Is the cannabis industry big enough to interest institutional capital?
The market is already substantial enough to warrant institutional attention.
Following the industry’s first year-over-year revenue decline in 2025 to under $30 billion, Oregon-based Whitney Economics forecasts U.S. legal cannabis sales of approximately $30.5 billion in 2026. Meanwhile, states recorded more than $4.57 billion in adult-use cannabis tax revenue in 2025. All told, cannabis taxes have pumped $28.4 billion into public coffers since the first adult-use markets opened more than a decade ago.
Those numbers quantify that the industry has reached meaningful scale – despite operating with financial and regulatory constraints shackling no other sector.
Federal policy is also moving again. Medical marijuana is a Schedule 3 drug, and there is hope that President Donald Trump, who ordered cannabis reform forward with a December 2025 executive order, might reward the cannabis industry with full rescheduling.
For investors, the significance is that the federal government is actively working through questions that institutional investors, banks, custodians, exchanges and other market participants have spent years waiting to see addressed.
What would marijuana rescheduling do for investors?
A final move to Schedule 3 would represent one of the most consequential changes in federal cannabis policy in decades, although it is important to be precise about what it would and would not accomplish.
Rescheduling would not make state-licensed cannabis businesses federally legal. DEA has been explicit that marijuana would remain subject to the Controlled Substances Act and other federal requirements even under Schedule 3.
That distinction matters. Institutional capital does not move simply because Washington changes a classification. Legal departments, compliance teams, exchanges, banks, custodians and investment committees make their own assessments before determining what activities they can support.
Still, Schedule 3 would fundamentally improve the cannabis industry’s financial position. It would also narrow the gap between cannabis and conventional sectors, and it should lead to a regulatory framework materially different from the Schedule 1 environment in which state-regulated operators have been forced to build their businesses.
The next phase will therefore be about implementation.
Investors should:
- Watch how federal registration requirements are applied,
- How financial institutions interpret the new framework,
- Whether custody restrictions change and
- How exchanges approach cannabis companies as the federal regulatory picture evolves.
- Those decisions may ultimately be as consequential for the flow of institutional capital as rescheduling itself.
What will attract institutional investors to cannabis?
Having spent much of my career in traditional capital markets, including 14 years at JPMorgan, I have seen this process play out.
Large pools of capital rarely arrive all at once. A security first has to be eligible for ownership. Custodians have to be comfortable holding it. Investment committees have to authorize exposure. Analysts need sufficient information to underwrite the business. Portfolio managers then look at liquidity, governance, financial performance, risk and valuation before deciding whether to allocate capital.
Cannabis will be no different. This is why I believe the most interesting story over the next several years will not simply be whether institutions enter the sector, but which companies are prepared when they do.
The industry remains uneven. Almost two years ago, First Citizens Bank, a top 20 U.S. bank with more than $225 billion in assets, estimated total U.S. cannabis sales at roughly $28.6 billion to $29.6 billion in 2025 as pricing pressure and oversupply weighed on mature markets.
But new markets are coming online, and others are finally reaching their potential. New York cannabis retailers notched a record $1.7 billion in legal sales in 2025. Sales are on pace to exceed that tally this year. And next summer, Virginia will launch recreational retail sales, with annual sales estimates hovering around $1 billion. But meanwhile, mature states like California are stumbling.
Cannabis has moved beyond the stage where legalization alone guarantees growth. Investors increasingly have to distinguish between good markets and bad markets, strong operators and weak operators, disciplined capital structures and overleveraged ones.
That is what happens when an industry matures.
Is the cannabis industry a mature market ready for big investors?
For operators, the period before broad institutional participation may prove just as important as what comes after.
Companies have an opportunity now to strengthen balance sheets, rationalize footprints, improve governance and demonstrate that their businesses can perform without relying on perpetual market expansion or speculative capital.
Real estate is part of that equation. Institutional investors examining cannabis companies will ultimately evaluate the same fundamentals they examine elsewhere, including facility quality, lease obligations, tenant financial strength, access to capital and the durability of the underlying business.
The strongest companies will not become institutional-quality businesses because institutions suddenly arrive. They will attract institutional capital because they spent years becoming businesses that institutions can underwrite.
Federal rescheduling could accelerate that process considerably, but it should not be viewed as a finish line. It is better understood as one of the most important steps yet in a longer transition from an industry financed largely by specialized capital to one that can increasingly participate in the traditional financial system.
The cannabis market has already reached a multibillion-dollar scale. The question now is whether its regulatory and financial infrastructure can begin to catch up.
Anthony Coniglio is the president, CEO and a member of the board of directors at real-estate investment trust NewLake Capital Partners.
