LEEF Brands heads into 2026 with something rare in cannabis: visible operational momentum and a powerful policy tailwind. The company has just delivered a breakout quarter, is scaling in two of the most important U.S. markets, and now stands to benefit directly if federal rescheduling of cannabis to Schedule III is finalized and a national CBD pilot takes shape.
Watch Leef Brands CEO Micah Anderson lead a tour of the company’s high tech extraction facility.
A stronger base: California + New York
The starting point for any 2026 outlook is LEEF’s current trajectory. In Q3 2025, revenue climbed to US$8.4 million, up 24% year over year, driven by increased market share in California and the first meaningful contributions from New York. Gross margin more than doubled to 45% from 22% a year earlier, as in‑house biomass from the Salisbury Canyon Ranch (SCR) and higher‑margin New York sales kicked in, while operating expenses actually fell 12%. The result: positive adjusted EBITDA and free cash flow, a notable achievement in a sector where many peers are still fighting just to break even.
Two operational levers will continue to matter in 2026:
- Salisbury Canyon Ranch ramp‑up. The 1,900‑acre SCR property in Santa Barbara County is being built out as one of the largest outdoor cannabis cultivation projects in the world, with a permit for 187 acres of cannabis and 100 acres of hemp. LEEF planted 65 acres in 2025, completed its first harvest, and immediately saw biomass costs drop to sub‑US$10 per pound, feeding directly into margins.
As the team refines strains and staggered plantings across second and third harvests, investors should watch for:
- How many acres are planted and harvested in 2026.
- Continued low in‑house biomass costs.
- Further margin expansion as purchased flower is replaced with SCR output.
- New York lab scaling. In New York, LEEF is operating a Type 1 processor facility focused on solventless concentrates, with a hydrocarbon line coming online as licensing and demand allow. Early 2025 output was fully pre‑sold, and the company has increased ethanol capacity by 66%, solventless by 50%, and hydrocarbon by 38% to meet demand.
For 2026, investors should look for evidence that:
- New York revenue is ramping toward a meaningful share of the total.
- The lab maintains premium pricing and high utilization.
- Additional brand partnerships and SKUs are signed as the market matures.
Together, a low‑cost California biomass engine and a high‑margin New York processing hub give LEEF a more resilient base than many retail‑heavy operators.
The 280E overhang—and what rescheduling could do
The other pillar of the 2026 story is policy. On December 18, 2025, President Trump signed an executive order directing federal agencies to reschedule marijuana from Schedule I to Schedule III under the Controlled Substances Act and to build a regulatory framework around hemp‑derived cannabinoids.
For LEEF, the implications are straightforward and significant:
- Removal of 280E. Schedule III status would exempt state‑legal cannabis businesses from IRS Code Section 280E, which currently prevents them from deducting ordinary business expenses like rent, payroll, and marketing. CEO Micah Anderson said rescheduling “removes the 280E tax burden, improving cash flow and allowing us to reinvest more efficiently in our people, facilities, and long‑term growth.”
In practice, that can mean:
- A step‑change in after‑tax profitability once the change takes effect.
- More capital available from internal cash flows, reducing reliance on expensive debt or dilution.
- Better access to capital. Management explicitly notes that rescheduling “may lead to greater participation from institutional investors, broaden the pool of available lenders, and lower the overall cost of capital.” If banks and credit funds become more comfortable underwriting plant‑touching risk under Schedule III, LEEF could:
- Refinance legacy obligations at lower rates.
- Fund SCR build‑out, New York expansion, or other state entries on better terms.
There are still unknowns—Congress could replace 280E with a federal excise tax, and banking reform is not guaranteed—but from an investor standpoint, the direction of travel is clearly favorable.
The under‑appreciated CBD/hemp angle
The same executive order also instructs the Centers for Medicare and Medicaid Services to design a Medicare pilot that would allow certain beneficiaries to receive up to roughly US$500 per year in physician‑recommended, hemp‑derived CBD products starting as early as 2026. LEEF called this out in its rescheduling release, saying it is “closely monitoring federal developments related to hemp‑derived cannabinoids and potential Medicare coverage for certain CBD products.”
This matters because of what LEEF already controls:
- 100‑acre hemp permit at SCR. In addition to the 187‑acre cannabis permit, LEEF holds a 100‑acre hemp cultivation permit at Salisbury Canyon Ranch, which is currently under “strategic review for optimal implementation.”
- Pharma‑grade extraction expertise. LEEF operates state‑of‑the‑art extraction and manufacturing facilities serving brands in California and New York, with the capability to produce high‑purity, consistent concentrates and ingredients at scale.
If a Medicare CBD pilot goes live, the federal government will care deeply about quality, traceability, and compliance—not the “gas‑station CBD” model. That environment naturally favors:
- Vertically integrated operators with secure, traceable biomass (like SCR).
- Sophisticated extractors who can meet pharmaceutical‑grade specifications.
In 2026, investors should watch for signs that LEEF:
- Activates some or all of its hemp acreage in response to clearer federal CBD rules.
- Announces supply or white‑label agreements with medical, nutraceutical, or pharma partners targeting the Medicare pilot or similar programs.
- Begins to segment its extraction capacity between THC and hemp/CBD opportunities as policy clarifies.
This “CBD as medicine” angle is still speculative, but it’s an under‑recognized call option embedded in LEEF’s asset base.
2026 watch‑list: what could move the stock
Putting it all together, here are the key 2026 milestones and catalysts investors might track:
- Operational and financial execution
- Continued double‑digit revenue growth from California and New York, with SCR and NY both contributing a full year.
- Sustain or expand gross margins from the Q3 2025 level of 45%, driven by low‑cost in‑house biomass and premium NY pricing.
- Maintenance of positive adjusted EBITDA and free cash flow, proving the model is structurally profitable even before 280E relief fully kicks in.
- Salisbury Canyon Ranch build‑out
- Acreage expansion beyond the initial 65 acres, with clear communication around yield, strain mix, and harvest cadence.
- Evidence that SCR continues to deliver sub‑US$10/lb input costs and stable quality.
- New York scaling
- Higher throughput at the NY lab and more brand partnerships, demonstrating LEEF’s role as a “picks and shovels” provider for East Coast brands.
- Progress on hydrocarbon operations and a broader product mix.
- Policy and capital
- Concrete steps in the rescheduling process (DEA rulemaking milestones, timing clarity) and any early commentary from management on expected 280E impact.
- Debt refinancing or new growth capital on better terms, reflecting improving regulatory risk perception. Leef already retired significant portions of its debt, and any banking-related improvements in the industry could compound the positive effect.
- Hemp/CBD strategy
- Any move to activate the 100‑acre hemp permit at SCR in light of federal CBD framework developments.
- Early positioning for the Medicare CBD pilot, such as exploratory partnerships or product‑development initiatives.
If LEEF can keep delivering operationally while the policy environment shifts in its favor, 2026 could be the year its story broadens from “undervalued California‑plus‑New‑York extractor” to “cash‑generating, multi‑state platform with optionality on a regulated, medical‑grade CBD market.” For investors in a sector that has often struggled to translate promise into profits, that combination of real numbers and real catalysts is exactly what to look for.
