Key Points
Green Thumb is about as blue chip as it comes in the U.S. cannabis industry.
The company has multiple potential catalysts that could drive its stock higher.
One knock against Green Thumb, though, is its steep valuation.
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Predicting what may or may not happen in the cannabis market isn't for the faint of heart. The industry continues to face several challenges. A quick look at the charts of some of the largest marijuana stocks over the last couple of years proves it.
However, my heart is feeling quite stout these days, so I'll step out on a limb with a prediction. I think Green Thumb Industries (OTC: GTBIF) stock will double over the next three years. Ridiculous? Not really.
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About as blue chip as it comes in the U.S. cannabis industry
While there aren't any true blue chip stocks in the U.S. cannabis industry, Green Thumb Industries is about as blue chip as you'll find. Its revenue continues to grow despite the aforementioned industry headwinds. The company consistently generates positive earnings and EBITDA. Its gross margins are strong.
Green Thumb's balance sheet is solid, too. At the end of 2025, the multistate cannabis operator had a cash position of $274.3 million. Its total debt was $244.9 million, including $142.5 million of senior debt. Granted, the company has subsequently expanded its syndicated credit facility by $50 million, but at a low rate.
The cannabis markets in which Green Thumb operates are among the most attractive in the U.S. Its 100+ RISE retail dispensaries are focused in states, including Illinois, Maryland, Massachusetts, Ohio, Pennsylvania, and Florida, that limit licenses, which reduces competition and supports pricing power to some extent.
Green Thumb's brands are strong as well. RYTHM, for example, ranks among the best-selling cannabis brands in the country. Dogwalker is also a top pre-roll brand.
Potential catalysts
What could propel Green Thumb to double in value over the next three years? The company has several potential catalysts.
The most obvious catalyst is federal reclassification of marijuana to a Schedule III drug (which reflects moderate to low potential for physical and psychological dependence). Importantly, rescheduling will remove the IRS Section 280E restrictions on cannabis companies' access to business tax deductions already available to most U.S. companies. This change could significantly boost Green Thumb's profits.
Federal reforms that open access for cannabis companies to traditional financial services could also light a fire beneath Green Thumb's stock. Although efforts such as the SAFE Banking Act haven't become law yet, the upcoming congressional elections could pave the way for passage in the not-too-distant future.
Gov. Josh Shapiro in Pennsylvania supports the legalization of recreational cannabis in his state. The state's legislature has rejected previous attempts to open a recreational marijuana market. However, the political winds could shift. If they do, Green Thumb is well-positioned to capitalize on a lucrative new opportunity in Pennsylvania.
Many multi-state operators are in precarious financial shape. We could see industry consolidation. Green Thumb, with its strong balance sheet, could acquire other companies at attractive valuations and possibly drive its earnings growth enough to help the stock deliver a 100% gain over the next three years.
There's one other possibility that I think could easily fuel a tremendous surge for Green Thumb. If the company is allowed to list its shares on a major U.S. stock exchange, its stock could realistically double, in my view.
One (green) thumb up
All eight analysts surveyed by S&P Global (NYSE: SPGI) in April who cover Green Thumb rated the stock a "buy." The consensus 12-month price target reflects a potential upside of more than 130%. Analysts think this marijuana stock will double in a year, not three years as I predict.
Why am I not quite as bullish as they are? Valuation. Green Thumb's shares currently trade at roughly 41 times forward earnings. I think the stock will be a winner in the coming years, but I can only give it one green thumb up because of its price tag.
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Keith Speights has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends S&P Global. 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.
