The First Attempt to Un-Legalize Cannabis 🔙

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The cannabis industry generated $27 billion in U.S. sales in 2025, according to an analysis of state data. 

Massachusetts set a new annual record. Ohio crossed the billion-dollar mark in its first full year of adult-use sales.

Then opponents filed ballot initiatives to end adult-use sales in three states.

This is unprecedented. In the 14 years since Colorado and Washington became the first states to legalize, no state has reversed course.

Now campaigns in Massachusetts, Maine, and Arizona aim to do exactly that in November 2026.

The timing is not coincidental.

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The $27 Billion Milestone

The cannabis industry spent 2025 answering every question skeptics have asked.

Can it generate consistent revenue? $27 billion in annual sales. 

Can it grow transaction volume even as prices fall? Massachusetts reported 46.3 million transactions, up 3.4 million from the prior year. 

Can new markets scale quickly? Ohio crossed $1 billion in its first full year of adult-use retail.

December alone generated $2.3 billion across 22 adult-use states and four major medical markets. California led at $348 million. Michigan followed at $262 million. New York hit $190 million as licensed retailers more than doubled from 261 to 556.

Massachusetts set a new annual record at $1.65 billion, exceeding 2024 by approximately $3 million despite continued price compression.

"The cannabis industry in Massachusetts continued to mature in 2025 with the number of cannabis businesses reaching the highest point since adult-use sales began in 2018," said Massachusetts Cannabis Control Commission Chair Shannon O'Brien.

The state generated $265 million in tax revenue during fiscal 2025. 

That's real money flowing to state programs, not theoretical projections.

The First Coordinated Rollback

While the industry posted record numbers, opposition mobilized.

The Marijuana Policy Project issued a direct warning to the cannabis industry: ballot initiatives in Massachusetts, Maine, and Arizona aim to end regulated adult-use sales in November 2026. 

Massachusetts and Maine initiatives would also re-criminalize non-medical home cultivation.

"These initiatives represent the first-ever large-scale coordinated attack on adult-use markets," wrote MPP Executive Director Adam Smith. "This is not a drill."

The Massachusetts campaign has submitted enough signatures to qualify and awaits validation. Signature collection continues in Maine and Arizona.

The Arizona committee chair told the Arizona Capitol Times the campaign expects to spend $5 million on signature gathering, with an additional $10 to $20 million planned for the broader campaign. 

In Massachusetts, MPP estimates at least $1 million was spent gathering signatures.

These are not symbolic protests. They are well-funded campaigns with experienced political operatives.

The Irony

Massachusetts just posted $1.65 billion in record sales.The campaign wants to end that market entirely.

Same state. Same year.

Dentons partners Joanne Caceres and Hannah King framed the financial implications in stark terms:

"Imagine the signal sent to investors if legalization proves politically reversible. The risk premium on cannabis assets would skyrocket. Lenders, insurers, and ancillary service providers would likely pull back. M&A activity, already tepid, could stall."

Republican support for legalization has dropped from 55% to 40% since 2023, according to Gallup. Anti-legalization messaging across right-wing media has worked to soften that support.

For operators in Massachusetts, Maine, and Arizona lenders will factor this risk into underwriting decisions. 

Businesses in these states should expect more scrutiny on state-specific exposure and may need to demonstrate diversification or contingency planning.

Rescheduling Progress vs. Banking Reality

President Trump's December 18 executive order directing the Attorney General to complete marijuana rescheduling generated significant momentum.

The U.S. House of Representatives passed a spending bill in a 397-28 vote that continues protecting state medical marijuana programs from federal intervention. 

The bill excludes a provision that previously advanced to block the Justice Department from rescheduling cannabis.

That's the win.

But here's the reality.

Banks haven't changed their position

Major U.S. banks are still refusing to do business with the cannabis industry despite the executive order.

"It's still too early to reconsider our position, and we will not change our stance," a top executive at JP Morgan Chase & Co. said in a memo, according to The New York Post.

Bankers argue that Trump's order focused on medical cannabis rather than adult-use. Without formal reclassification as a Schedule 3 drug, the industry's banking problems persist.

"The industry is going to be banked whether they want to or not because Trump wants it to be banked," former hedge fund manager Marc Cohodes told The Post. "Trump hates the fact that U.S. pot companies employing U.S. workers, paying U.S. taxes can't get listed on any exchange but Canadian companies can."

Congressional Opposition Complicates Reform

The executive order defied voters and lawmakers within the Republican Party, many of whom want cannabis' status quo intact.

A total of 48 Republican lawmakers signed letters opposing rescheduling. Key opponents include House Speaker Mike Johnson of Louisiana, Senate Majority Whip John Barrasso of Wyoming, and Rep. Andy Harris of Maryland, chair of the Freedom Caucus.

The SAFER Banking Act, which would provide explicit legal protections for banks serving state-legal cannabis businesses, has gone nowhere since Republicans took control of Congress.

Senator Cynthia Lummis of Wyoming backed marijuana banking legislation but also signed the letter opposing rescheduling. This contradiction captures the political complexity facing the industry.

What This Means

The cannabis industry just demonstrated it works. $27 billion in annual sales. Record state revenues. Improving MSO fundamentals.

That success is now attracting two responses simultaneously.

First: well-funded campaigns to reverse it. The first coordinated attempt to un-legalize cannabis in American history.

Second: continued banking exclusion despite executive action. JP Morgan says "too early." Congress remains deadlocked.

Alternative financing infrastructure matters for cannabis operators more than ever.. Major MSOs are restructuring debt through specialized lenders, not banks. M&A continues through all-stock transactions because cash deals remain operationally difficult.

The only question is whether operators in at-risk states have the balance sheet strength to weather a campaign cycle that will create uncertainty through November 2026.

If you're a cannabis operator in Massachusetts, Maine, or Arizona:

• Assess your state-specific exposure. Lenders will scrutinize concentration risk in these markets.

• Document your fundamentals. Record sales and transaction growth provide counterarguments to rollback narratives.

• Build relationships with cannabis-focused lenders now. Don't wait until the campaign heats up.

If you're seeking debt refinancing:

• Start conversations early. Canopy's runway extension to 2031 shows what's possible with the right advisors.

• Expect all-stock structures. Cash remains constrained. Plan deal terms accordingly.

• Monitor rescheduling timeline. 280E relief, when it arrives, will significantly improve cash flow for refinancing.

The industry proved its model. Now it has to defend it.