President Trump's Push to Reschedule Marijuana Hit a Snag. Is Green Thumb Still a Buy?

Marijuana rescheduling was supposed to give U.S. cannabis companies some much-needed relief. Instead, another regulatory dispute threatens to drag out a process that's already taken years.

The latest complication involves a Government Accountability Office report examining how federal agencies evaluate controlled substances. Opponents of marijuana rescheduling want the report added to the administrative record, along with additional testimony and access to documents.

The DEA has indicated it doesn't object to including the report. But the additional requests could delay a final decision on moving marijuana from Schedule I to Schedule III.

For Green Thumb Industries (OTC: GTBIF), the timing is frustrating, as rescheduling could eliminate a major federal tax burden and allow the company to keep more of the money it earns. That said, there's a stronger argument for owning Green Thumb than betting on what happens in Washington.

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The tax situation could change dramatically

Cannabis companies face an unusual disadvantage under Section 280E of the federal tax code. Because marijuana remains a Schedule I substance for much of the industry, businesses generally cannot deduct ordinary operating expenses such as employee salaries, rent, and advertising when calculating federal taxable income. Moving marijuana to Schedule III would eliminate that restriction for qualifying activities.

Green Thumb could benefit substantially, though the exact savings would depend on the final rules and how they're implemented. Until then, the company must continue operating under a tax structure that most other businesses don't face.

But even with that disadvantage, Green Thumb still generated $29 million in operating cash flow during Q2 2026. Revenue reached $306.7 million, while normalized earnings before interest, taxes, depreciation, and amortization (EBITDA) totaled $84.3 million. The company also reported $4.9 million in net income. Those results provide a useful glimpse of what Green Thumb is capable of, even in the absence of any broader federal tax relief.

The stock doesn't require a rescheduling victory

At approximately $6.40 per share, Green Thumb carries a market capitalization of around $1.4 billion, or roughly 1.1 times annualized second-quarter revenue. That's a relatively modest sales multiple for a company with an established retail network, positive earnings, and meaningful cash generation. The valuation also leaves room for improvement if the company can stabilize margins.

Q2 gross margin fell to 45% from 49.9% a year earlier, reflecting the competitive pressures facing cannabis retailers. But Green Thumb has been using its financial flexibility to repurchase shares. By the end of the quarter, it had repurchased about 29.5 million shares for $203.4 million. Those buybacks help reduce Green Thumb's outstanding share count, giving remaining shareholders a larger ownership stake in the company.

Should you buy?

Green Thumb's biggest near-term catalyst remains federal policy, but its investment case shouldn't depend entirely on rescheduling. At its current valuation, the stock offers exposure to an established cannabis business that's already generating cash, with the possibility of substantial tax relief if federal reform advances.

To be sure, the risks remain significant, including pricing pressure, regulatory uncertainty, and uneven growth across state markets. Still, Green Thumb looks attractive if you're patient and can tolerate a bit of volatility. A delayed rescheduling decision may frustrate shareholders, but it doesn't erase the company's earnings, cash flow, or potential upside.

Jeff Siegel has no position in any of the stocks mentioned. The Motley Fool recommends Green Thumb Industries. The Motley Fool has a disclosure policy.