Viridian Forecasts Accelerated M&A in Cannabis This Year

LOS ANGELES – Viridian Capital Advisors, a New York-based firm specializing in Cannabis finance and advisory services, has released its Key Insights for the U.S. Cannabis sector in 2026. The firm’s analysts forecast a pickup in merger and acquisition activity, driven by several converging factors.

A key catalyst, according to Viridian, will be the completion of federal rescheduling of Cannabis in H1 2026. This step would remove certain tax burdens under IRC Section 280E, improve industry legitimacy, and enable public Cannabis companies to use their shares more effectively as currency in deals. Lower borrowing costs and greater debt capacity would further support cash-financed transactions.

The firm notes that many operators have spent years focused on liquidity preservation amid tight capital markets. Executives are now more open to exits at current valuations, accepting that pre-2021 highs are unlikely to return and that all-cash deals from the low-interest era will remain rare.

Viridian anticipates limited large-scale combinations between top-tier multistate operators (MSOs) and mid-tier ones. Overlapping store footprints create divestiture challenges, and the valuation spread between tiers has narrowed, reducing accretion potential for buyers. Instead, MSOs are expected to prioritize filling gaps in existing strong markets through targeted dispensary additions, particularly where they rank among the top five players and maintain vertical integration. Expansion could occur in emerging or potential adult-use states such as Virginia, Pennsylvania, and to a lesser extent Florida.

Private single-state operators should remain active in consolidating markets like Missouri and Michigan. Distressed-asset consolidations [similar to Vireo’s moves in Colorado] will persist, along with accelerated retail roll-ups in California. Brand-level mergers, exemplified by recent deals like Wyld-Gron and Sunderstorm-Lime, are projected to increase as manufacturers seek scale in production, sourcing, and overhead to support entry into additional states.

Employee stock ownership plans (ESOPs) will stay attractive for transitions, even with reduced tax advantages post-rescheduling.

On the policy front, Viridian expects no major legislative breakthroughs such as the SAFER Banking Act in the current political climate. Efforts to reverse adult-use legalization in certain states will fall short, given the fiscal appeal of tax revenue and limited evidence of public health gains from prohibition.

The much-discussed “Debt Tsunami” of 2026 maturities is viewed as manageable. Major players like Curaleaf and Verano are expected to refinance smoothly, while Jushi may require substantial insider support but should avoid collapse.

Florida’s latest push for adult-use legalization appears unlikely to succeed, with polls showing eroding support and strengthened opposition, potentially compounded by any prolonged restrictions on hemp-derived products.

Viridian highlights a strategic shift: after prioritizing positive free cash flow in recent years, companies will increasingly emphasize return on invested capital (ROIC) in 2026. With equity markets potentially reopening, operators can divest or shutter low-return assets and concentrate resources on high-scale opportunities, as seen in Curaleaf’s Missouri exit.

These expectations reflect a maturing industry prioritizing disciplined growth over speculative expansion. Rescheduling delivers tangible [though incremental] progress on tax treatment and capital flexibility, setting conditions for steadier consolidation without the valuation excesses of earlier boom periods. Debt resolutions appear contained based on operator balance sheets and creditor willingness. Overall, 2026 shapes up as a year of pragmatic deal-making and capital discipline rather than explosive growth.

Source: Viridian Capital Advisors