Forget Rescheduling: Green Thumb's Cash Flow Is the Real Reason to Own It

For marijuana stocks, regulatory clarity remains a key issue. Progress such as federal rescheduling remains stymied. However, for Green Thumb (OTC: GTBIF), a multi-state operator (MSO), or operator of cannabis businesses licensed at the U.S. state level, federal regulatory clarity isn't a necessary ingredient for profitability. This is especially true considering the company's relatively high cash flow.

If regulatory progress gains momentum, Green Thumb's stock price could rise more rapidly than the prices of better-known yet unprofitable names like Aurora Cannabis or Canopy Growth.

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Green Thumb is "in the green" in more ways than one

Green Thumb doesn't only have a "green thumb" in terms of the size of its cannabis cultivation, marketing, and sales operation. Unlike its competitors, which are still unprofitable, Green Thumb has been consistently profitable, with strong operating cash flow to boot. For instance, in 2025, the company reported GAAP earnings of $114.2 million, operating cash flow of $294.9 million, and normalized EBITDA of $348.4 million, or a nearly 30% EBITDA margin.

EBITDA and cash flow are very high relative to Green Thumb's $1.4 billion market cap and $1.7 billion enterprise value. Moreover, the company continues to put its cash flow to good use, devoting much of it to share repurchases. Under its current share repurchase program, Green Thumb has repurchased approximately $203.4 million in stock and remains authorized to repurchase an additional $62.3 million.

As for more recent results? Normalized EBITDA has remained at $84.3 million in second-quarter 2026. Although operating cash flow during the first half of 2026 fell to $104.8 million from $130.7 million in the prior year's quarter, factors such as Green Thumb's further expansion in the United States, including new locations in New Jersey and Pennsylvania, may help explain this drop.

Regulatory progress remains a top catalyst

Existing profitability may be the key reason to buy Green Thumb over its more well-known peers, but don't expect high earnings and a low valuation to serve as their own catalyst. As 280E regulations, which affect the deductibility of most cannabis business operations, remain in place, and the U.S. federal government's overall position on marijuana remains unclear, even profitable cannabis companies will keep trading at low multiples to EBITDA and operating cash flow.

However, when -- not if -- rescheduling finally takes shape, it could be a boon for this stock. For one, full rescheduling of marijuana, including for recreational use, will bode well for profitability, as it will pave the way for the elimination of 280E limits on deducting business expenses. Once federal regulatory clarity takes shape, Wall Street could become more willing to rerate the sector. Green Thumb has declined more than 71% over the past five years, but in the five years ahead, don't rule out the potential for a major comeback.

Of course, as with any bull case, it's not a full slam dunk. Keep an eye on operating cash flow. If the latest drop continues into the second half of 2026, it could be a sign of new challenges for the company. Other than that, however, if you're bullish that the recent regulatory gridlock around rescheduling will clear up sooner rather than later, a great way to play this view is with profitable cannabis stocks like Green Thumb.

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