Schedule III Is Creating a Shakeout: Not All Boats Are Being Lifted

Two weeks ago, Donald Trump reignited the national conversation around cannabis rescheduling, signaling support for a move to Schedule III. For many, the reaction was immediate optimism tax relief, institutional capital, and long-awaited legitimacy. But beneath that optimism is a harder truth: this moment isn’t a rising tide lifting all boats. It’s a shakeout.

Texas: A Market With Potential, Not Performance

You can see it already in the deal flow. Today in the news, moves like Vireo Health acquiring Fluent, while Cansortium (AKA Fluent) sells its Texas assets to Legacy Therapeutics for $30 million, are being framed as growth and consolidation. In reality, they reflect something more nuanced. Operators are not simply expanding; they are refining. They are shedding markets that no longer align with their path to profitability and doubling down where performance is real.

Texas is a perfect example of this disconnect between potential and performance. In its current form, the market is structurally constrained, with limited THC access, restricted retail frameworks, and a ceiling on meaningful revenue generation. So when assets trade hands, it is not because they are producing strong cash flow. It is because they represent a future position. What is being purchased is not scale it is future based option trading. A place at the table if and when the regulatory environment shifts. Until then, Texas remains more of a strategic placeholder than a commercial engine.

In reality, with this scenario Schedule III rescheduling becomes less of a lifeline and more of a filter. While the removal of 280E tax burdens could unlock meaningful financial relief, it will not automatically fix broken models. In fact, it will do the opposite. It will expose them. As margins tighten before they expand and capital becomes more disciplined, only operators with real efficiency, real demand, and real strategy will be able to move forward with confidence. Everyone else will feel some real pressure.

The New Question: Should Operators Sell Their Assets?

That pressure is already driving one of the most important questions in the industry right now: should operators be selling their assets? The answer is not as simple as yes or no. It depends entirely on what those assets represent in a Schedule III world. For some, selling is not a sign of weakness but a strategic decision. If an operator is tied up in a market that cannot currently deliver meaningful returns, or if they lack the capital to survive the next 12 to 24 months, selling may be the most disciplined way to preserve value. The same is true when an asset is worth more in the hands of a larger, better-capitalized operator who can unlock scale and distribution that a smaller company cannot.

At the same time, not all operators should be looking for an exit. Those with strong brand identity, consistent consumer demand, and presence in high-growth states like Ohio, New Jersey, and Maryland are positioned differently. They are not trying to survive the transition; they are positioned to benefit from it. In these cases, the opportunity is not to sell, but to accelerate. To deepen market penetration, to build loyalty, and to expand through more flexible, asset-light strategies that avoid the very burdens others are trying to offload.

The smartest approach may not be a yes or no decision at all. Increasingly, the operators who are navigating this moment are shaving off risk. They are selling what is underperforming, holding what is working, and finding new ways to expand without overextending themselves. This is not giving in. This is playing the game with the new hand of cards that have been dealt. It is a shift from chasing locations to focusing on performance.

Capital Is No Longer Chasing Potential

What is becoming clear is that capital is no longer chasing potential. For years, the industry was fueled by speculation licenses, future markets, and the promise of eventual legalization. Today, that narrative has shifted. Investors are asking harder questions about revenue, repeat consumer behavior, and scalability. The companies that can answer those questions with clarity are the ones that will attract capital. The rest will struggle to keep up.

In this environment, brands are emerging as one of the most durable advantages. Consumers do not build loyalty to cultivation facilities or licenses. They build loyalty to experiences, to trust, and to identity. As the industry matures, that distinction becomes more important. The operators who understand this will have a different kind of leverage one that travels across markets and regulatory environments.

Schedule III is not the finish line. It is the beginning of a new phase, one that will define who is truly built for the long term.

Discipline matters more than hype. Strategy matters more than presence. Execution matters more than access. And perhaps most importantly, every operator must now ask a more pointed question: is this asset helping me win, or is it simply helping me survive? Because this is not a moment where all boats rise. It is a moment where some operators sell to survive, others sell to reposition, and a select few hold, scale, and lead. The path to the finish line favors the prepared.

Dr. Roz McCarthy

Author

Founder/ CEO

M4MM & Black Buddha Cannabis