U.S. Cannabis Companies Face EBITDA Declines Amid Margin Pressures But Growth Expected in 2026

NEW YORK- As of April 1, 2025, most major publicly traded U.S. cannabis companies have released their financial results for the fourth quarter of 2024. An analysis by Viridian Capital Advisors reveals that eight out of twelve companies experienced year-over-year declines in quarterly EBITDA, ranging from a 6.5% decrease for Ascend Wellness Holdings (AAWH: OTCQX) to a 42.9% drop for The Cannabist Company (CBST: Cboe). Conversely, four companies reported EBITDA gains, with increases between 7.7% for Green Thumb Industries (GTII: CSE) and 26.6% for Trulieve (TRUL: CSE). Overall, the group saw an aggregate EBITDA decline of 5% for the quarter.

The primary factors contributing to these EBITDA declines include inflationary cost pressures and ongoing price compression within the cannabis market. Additionally, several companies have expressed concerns about weakening consumer demand amid broader macroeconomic challenges. The difficulty in reducing excess capacity, due to high exit barriers and the pressure to operate facilities at full capacity, further exacerbates margin pressures.

Looking ahead, consensus estimates project a 4.0% aggregate EBITDA decline for these companies in 2025, driven by an anticipated 0.7% decrease in sales and a 3.3% reduction in EBITDA margins. Factors contributing to these projections include the absence of new adult-use markets and continued price compression in maturing markets. However, a more robust growth of 4.8% is projected for 2026, anticipating progress in states like Pennsylvania and Virginia, with EBITDA margins expected to rebound to 2024 levels due to the impact of these new markets.

Interestingly, Tier 2 and 3 Multi-State Operators (MSOs) such as Ascend Wellness Holdings, TerrAscend (TSND: TSX), Jushi Holdings (JUSHF: OTCQX), and MariMed (MRMD: CSE) are projected to experience significant EBITDA growth in 2025. Investors should, however, exercise caution regarding the credit quality of smaller companies, as they often possess less financial flexibility. According to the Viridian Credit Tracker model, TerrAscend, Ascend Wellness Holdings, Jushi Holdings, and MariMed are ranked 11th, 12th, 16th, and 17th, respectively, out of 31 companies evaluated weekly.

For instance, The Cannabist Company reported a fourth-quarter revenue of $96.1 million, a 16% decrease from the previous quarter, primarily due to the divestiture of assets in Eastern Virginia, Arizona, and Florida. The company’s adjusted EBITDA for Q4 was $7.0 million, down from $14.8 million in Q3, largely impacted by these asset sales and pricing pressures in key markets.

Similarly, TerrAscend reported preliminary Q4 2024 net revenue of $74.4 million, a slight increase from the previous quarter, with a gross profit margin of 50.2%. The company also achieved positive cash flow from operations during the quarter.

As the cannabis industry navigates these financial challenges, stakeholders should closely monitor market dynamics and company-specific strategies to adapt to the evolving landscape. In particular, investors should be studying MSO margins very carefully.