💸 The Tape

In the ever-evolving world of cannabis—where the green rush meets regulatory red tape—the limited licensing structure continues to shape an industry that's as unpredictable as a surprise THC edible. As we roll into 2026, with the U.S. market projected to hit $47 billion, let's unpack how these frameworks influence everything from pricing to long-term viability, drawing lessons from key states like Michigan, Florida, Massachusetts, Nevada, and Arizona. It's a tale of controlled chaos, where too few licenses can create cozy cartels, and too many can flood the market faster than a poorly timed harvest.

At its core, limited licensing caps the number of permits for cultivation, processing, distribution, or retail to manage supply, ensure quality, and rake in hefty fees. Think of it as the industry's bouncer: exclusive entry keeps the party upscale but can leave newcomers out in the cold. Florida exemplifies this with its medical-only market, mandating vertical integration for its roughly 25 Medical Marijuana Treatment Centers (MMTCs). Here, operators must handle the full chain—from seed to sale—favoring deep-pocketed giants. Prices remain elevated at around $10.5 per gram retail, but the system's rigidity stifles diversity and equity, with discussions simmering for expansion after a failed recreational ballot.

Arizona, capped at 169 dispensaries (tied to pharmacies), boasts higher per-store revenues of about $8.3 million annually, but sales dipped amid oversupply woes. Contrast this with unlimited models. Michigan, adult-use since 2018, has issued over 1,000 cultivation licenses without caps, sparking explosive growth but a glut that slashed wholesale prices below $800 per pound. Retail flower plummeted from $14.79 per gram in 2020 to around $3 per gram by 2026, prompting a new 24% wholesale tax to stabilize the race to the bottom. Massachusetts, with no statewide limits but local options, saw monthly sales hit $131.5 million, yet prices compressed to about $4 per gram amid 66% drops from 2021 peaks. Nevada's hybrid—capped at around 556 retail licenses—balances supply, keeping prices stable at $7-10 per gram while incorporating equity lotteries.

These structures directly fuel pricing trends. Nationally, wholesale flower hit around $1,020 per pound by mid-2025, down $100 per pound year-over-year, thanks to outdoor harvests in states like Michigan and Arizona. Limited systems constrain supply, adding 40% markups via fees, while unlimited ones enable discounts but erode margins—evidenced by rising promotions at 35-39% in Arizona and similar markets. Volatility persists: mature markets face 32% price drops since 2021, while new ones command premiums up to four times higher.

But is this sustainable? Not entirely. Limited models risk monopolies and barriers for social equity applicants—many states with caps hinder diversity—while unlimited ones lead to surpluses, with Michigan's producers declining 31.6%. Oversupply diverts to illicit channels, and regulatory burdens add costs. Sustainability is gaining traction as a brand value, with younger consumers demanding ethical practices like energy-efficient cultivation—standards in places like New York set a precedent.

From the get-go, the industry might have fared better with a phased approach: start medical with limits, transition to expandable adult-use caps prioritizing equity, akin to models in some states. This could have avoided immediate floods or exclusions.

Peering into the future, the sector could balloon to $125-444 billion by 2030, with more adult-use states. A three-tier system—mirroring alcohol's producers, distributors, retailers—looms as a logical evolution, preventing vertical dominance and fostering competition. It might add wholesaler costs but enable standardized distribution, especially with interstate commerce on the horizon. Hemp's rise as a dispensary alternative underscores this shift, potentially normalizing supply chains. Hybrids with adjustable caps, direct-to-consumer for small producers, and incentives for eco-friendly ops could create a booming, efficient market—turning today's regulatory tangle into tomorrow's streamlined success.

In this high-stakes game, adaptability is key. As one executive quipped, "Survive the compression, thrive in the expansion." For operators, balancing supply, equity, and innovation will determine who gets the last laugh—or puff.

📈 Dog Walkers

$IIPR ( ▲ 0.98% ) Reports

In the sometimes-volatile world of cannabis real estate, Innovative Industrial Properties, Inc. (NYSE: IIPR) just proved that patience, diversification, and a little balance-sheet housekeeping can still deliver respectable returns.

The specialist REIT released fourth-quarter and full-year 2025 results on February 23, 2026, showing total revenues of $266.0 million for the year and net income attributable to common stockholders of $114.4 million, or $3.93 per diluted share. Adjusted funds from operations (AFFO) came in at $205.4 million, or $7.24 per share. The board declared dividends totaling $7.60 per common share for the year — the ninth consecutive annual increase since the company’s 2016 inception — pushing cumulative payouts to shareholders past the $1.1 billion mark.

Executive Chairman Alan Gold captured the tone perfectly: “During 2025, we made significant progress executing on our strategy to diversify the Company’s portfolio, strengthen our balance sheet, and actively resolve tenant-related matters. Our strategic investment in IQHQ and establishment of a new $100 million revolving credit facility reflect our disciplined approach to capital allocation, while our ongoing tenant resolutions and new leasing activity demonstrate the underlying value of, and demand for, our real estate portfolio.”

The most notable strategic move was the up-to-$270 million investment in IQHQ, Inc., a premier life-science real estate platform — $100 million fully funded revolver plus $50 million of preferred equity drawn by year-end, with another $120 million committed through mid-2027. This marks IIP’s clearest step yet beyond pure-play cannabis into higher-growth, lower-volatility sectors.

On the leasing front, the company signed 339,000 square feet of new deals, including three full-building leases closed or executed in late 2025 and early 2026: 70,000 sq ft in North Palm Springs, CA; 58,000 sq ft in Holliston, MA; and 204,000 sq ft in Desert Hot Springs, CA. Meanwhile, tenant resolutions produced meaningful cash: Gold Flora and PharmaCann together delivered $5.05 million in Q4 and early 2026 payments, with IIP regaining possession of an Illinois cultivation site and lining up new tenants for several others.

The balance sheet remains fortress-like — debt-to-total-gross-assets at just 14%, total liquidity of $107.6 million, and a 10.4x debt-service coverage ratio. During the quarter, IIP raised $5 million via its ATM preferred-stock program; another $40.4 million followed in January, bringing recent preferred proceeds to $45.4 million. A new $100 million secured revolver backed by the IQHQ stake closed in October.

Q4 revenues dipped 13% year-over-year to $66.7 million, largely reflecting lingering tenant defaults, but the company still generated $53.3 million in AFFO ($1.88 per share) and paid its $1.90 quarterly dividend on schedule.

For an industry REIT that has weathered more tenant drama than most, 2025 was less about headline growth and more about quiet repositioning — swapping risk for resilience, cannabis concentration for life-science optionality, and uncertainty for a longer runway. In a sector where headlines often swing wildly, IIP continues to play the long game with the steady hand investors have come to expect.

A Study To Watch

Source: MJ Biz

In an industry that markets itself as “clean, green, and tested,” one Colorado scientist is asking a stomach-churning question: what if the real problem isn’t on the label — it’s the mold the tests never check for?

Tess Eidem, a researcher at a Colorado university, warned last week that state-mandated cannabis testing catches some contaminants but completely misses mycotoxins — toxic compounds produced by molds like Fusarium. These toxins, she told Denver’s KUSA-9, could help explain the sharp rise in cannabis hyperemesis syndrome, the debilitating condition known for extreme, cyclical vomiting sometimes dubbed “scromiting.”

The gap is glaring. Neither Canada nor any U.S. state requires testing for Fusarium or its notorious byproduct, Vomitoxin — a name that needs no further explanation. A 2025 study in Environmental Health Perspectives found vaporizers aren’t hot enough to kill the microbe, and symptoms of Fusarium poisoning mirror hyperemesis almost exactly. Eidem noted Vomitoxin has been detected in Canadian cannabis at twice the level allowed in human food, adding, “We’re also seeing an increased incidence in vomiting associated with cannabis use, and so there’s a correlation there.”

The issue deepens with remediation. Colorado law allows mold-failed cannabis to be irradiated or otherwise treated and sold without any “previously failed” label. That remediated product may still carry mycotoxins. Eidem told WUSA: “We do not know if it’s causing some of this cyclical vomiting… but there’s enough evidence now to show that these mycotoxins… could be a consumer safety risk.”

The state’s own numbers underscore the concern. In 2025 the Marijuana Enforcement Division issued a record number of recalls; by September, 465 stores had sold products later pulled for contaminants, including mold. Yet regulators downplayed any Fusarium link, calling it not “widespread.”

For a market that spent years fighting for legitimacy through rigorous testing, the blind spot is uncomfortable. As hyperemesis cases climb and critics point fingers at the $32 billion industry, Eidem’s warning is simple: testing that stops at visible mold may be missing the invisible toxin making consumers sick. Until regulators close that gap, the “clean” label may come with a side of unintended consequences.

🗞️ The News

📺 YouTube

Smart Money Moving Before Schedule III? | TTB Powered by Flowhub

What we will cover:

✅ In the latest Trade To Black podcast presented by Flowhub, hosts Shadd Dales and Anthony Varrell break down one of the most pivotal weeks in cannabis industry news.

Rumors are intensifying that federal cannabis rescheduling could be finalized soon. Could marijuana officially move to Schedule III — and what would that mean for MSOs, capital markets, and institutional investment?

Meanwhile, Green Thumb Industries (OTCQX: BTBIF) secured an additional $50 million in senior debt financing, expanding its syndicated credit facility to $189 million. The five-year agreement, led by Valley National Bank and maturing in 2029, included no equity issuance — a signal that major operators are strengthening liquidity ahead of potential regulatory change.

With Curaleaf (TSX: CURA), Trulieve (OTCQX: TCNNF), and Cresco Labs (OTCQX: CRLBF) also active recently, is M&A acceleration pointing to something bigger?

The episode also covers breaking developments from the DOJ, which told the Supreme Court that the federal gun ban for marijuana users should remain in place — even if rescheduling is finalized.