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Written by James Halley for The Motley Fool->
Trulieve is the largest multi-state operator in the U.S., with more than 200 dispensaries.
Green Thumb is the rare profitable pure-play cannabis company.
Green Thumb has approved stock buybacks.
Cannabis stocks jumped on April 23 when the U.S. Department of Justice announced it was reclassifying cannabis from a Schedule I to a Schedule III drug. When the smoke cleared, however, and investors understood that the impact was limited to medical marijuana, many stocks in the sector slumped.
However, there are cannabis companies that will greatly benefit from the reclassifying. These two, Trulieve Cannabis (OTC: TCNNF) and Green Thumb Industries (OTC: GTBIF), have deep interests in medical-marijuana-only states and are profitable enough to benefit from the removal of the tax burden that reclassifying brings.
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Trulieve has historically been one of the most profitable operators, but -- due to its high volume of retail sales -- it was also one of those hardest hit by the deductions and credits disallowed by IRS Code Section 280E. But things have changed. The federal government notes that "rescheduling generally removes section 280E as a bar to claiming deductions and credits for businesses that ... no longer traffic in Schedule I or II controlled substances ..."
So the shift to Schedule III is expected to save the company a significant amount in taxes, which can be redirected toward expansion. Trulieve is already appealing the 280E provision, and in 2023 filed amended federal tax returns for 2019, 2020, and 2021, projecting $143 million in federal refunds and $31 million in state tax refunds, though there's no guarantee it will get those refunds.
The removal of 280E rules means that Trulieve will now be able to deduct ordinary business expenses from its medical marijuana sales, and that is expected to lower its effective tax rates from 60% to 70% to around 21%. That will have a huge impact on the company's profitability.
In 2025, Trulieve had revenue of $1.2 billion and a record adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $427 million, up 2%. It has 169 retail locations open in Florida, a medical-cannabis-only state that may someday allow recreational adult-use sales. In February, state officials said that a proposed amendment to Florida's constitution that would allow recreational marijuana use for adults would not qualify for the 2026 ballot.
If Florida approves adult-use sales, the company's dominant presence in the state from medical marijuana sales could give it an early mover advantage in recreational sales.
Unlike many of its peers, Green Thumb has maintained positive GAAP (unadjusted) net income even under the old tax laws. In the reclassified era, its margins are expected to expand, making it a top pick for institutional investors looking for a blue chip entry into the sector.
Green Thumb has 110 retail outlets, including 19 dispensaries in Pennsylvania and 22 in Florida, two fast-growing medical-marijuana-only states. The company has a strong balance sheet and is one of the few operators actively buying back its own shares, signaling management's confidence in the 2026-2027 growth cycle. On April 23, Green Thumb's board authorized an additional $100 million for its share repurchase program, bringing the total authorized amount to $150 million.
In 2025, Green Thumb reported revenue of $1.2 billion, up 3.4%, and earnings per share (EPS) of $0.48, up 60%. It also said it had bought back 7.7 million shares of its stock in 2025, at a cost of roughly $39 million.
The company's Rythm line is considered the No. 1 cannabis flower brand in the U.S. and that brand recognition gives it an edge in expansion.
Investors have overreacted to positive news in the cannabis sector in the past. However, the latest news could have a direct positive impact on both of these companies' bottom lines. Of the two stocks, I like Green Thumb better because its finances are in a stronger position to support its growth. It is the only major multi-state operator that doesn't just report adjusted profits but also actual GAAP net income.
Trulieve may be a better choice for those with a higher risk tolerance -- freed from the shackles of 280E, it could see higher margin gains.
One other catalyst to watch for both stocks is a June 29 DEA hearing that could decide whether all marijuana, including adult-only sales, should join medical marijuana as a Schedule III drug.
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James Halley has no position in any of the stocks mentioned. The Motley Fool recommends Green Thumb Industries. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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