Ninepoint Cannabis & Alternative Health Fund

We are focusing the outlook for 2026 on several areas where we believe there is significant upside for unitholders. Those sectors include US cannabis, consumer health, health tech and info tech participation in the delivery of health services.

US Cannabis

There are several catalysts that result in our view that 2026 offers significant upside for the US cannabis sector. 

Let’s begin with rescheduling. Months after President Trump said a decision on cannabis reform was imminent, he announced the most important catalyst supporting the US cannabis industry. President Trump issued an Executive Order on December 18th with respect to rescheduling cannabis. The EO is a directive for various federal agencies (under his direct control) to move cannabis from Schedule I to Schedule III of the Controlled Substances Act (CSA). The Executive Order states that the Attorney General “shall take all necessary steps to complete the rulemaking process related to rescheduling marijuana to Schedule III of the CSA in the most expeditious manner".

For the portfolio team, we believe political expediency for Republicans leads to a higher probability of success in the first 6 to 8 months of 2026, prior to the US mid-term elections, where Republicans want to continue to control both houses of Congress. President Trump was very specific in the wording of his Executive Order. The EO is not to reopen hearings or review the medical or scientific research previously undertaken. The EO instructs the Attorney General to expeditiously complete the process. A likely scenario is that the Dept of Justice (DOJ) could simply publish a final rule. 

To be clear, rescheduling will not federally legalize cannabis, the policy change will allow state-licensed marijuana businesses to take regular federal tax deductions that they have previously been deprived of under an Internal Revenue Service (IRS) code known as 280E. Moving to Schedule III, previous barriers applied to Schedule I drugs will also be eliminated, making medical research easier. Trump’s executive order also urges Congress to examine updating the definition of hemp to ensure that full-spectrum CBD is accessible to patients. If lawmakers agree, it could mitigate some concerns in the sector that began when a congressional spending bill to reopen the US government included a provision to ban consumable hemp products by November 2026.

The Executive Order states, “The lack of appropriate research on medical marijuana and consequent lack of FDA approval leaves American patients and doctors without adequate guidance on appropriate prescribing and utilization, especially as just over half of older Americans using marijuana have discussed the usage with their healthcare provider,” it says. “Schedule III status will allow research studies to incorporate real-world evidence and models that can assess the health outcomes of medical marijuana and legal CBD products while focusing on long-term health effects in vulnerable populations like adolescents and young adults.”

President Trump added that “This action has been requested by American patients suffering from extreme pain, incurable diseases, aggressive cancers, seizure disorders, neurological problems and more— including numerous veterans with service-related injuries and older Americans who live with chronic medical problems that severely degrade their quality of life.”

There is still a possibility that the DOJ and DEA request that the stalled administrative hearings and related submission of testimony and evidence need to be processed. However, for political reasons, we are of the opinion that a more compressed timeline to approval is likely.

Regardless of the timing or process, there is still the prospect of litigation following the publication of a final rule in the Federal Register. Parties may likely file lawsuits and seek a preliminary injunction, which could delay final resolution and implementation. Despite these overhangs, rescheduling is a positive that the market is not fully appreciating, and so overall, US cannabis is undervalued in our opinion.

The most immediate and direct impact would be the elimination of IRCs. 280E tax treatment of US cannabis businesses is an impediment that previously impacted free cash flow generation. With re-scheduling and the removal of 280E, US cannabis businesses enhance their cash flow generation and opportunity for growth with lower cost of capital and enhanced ability to re-invest capital. 

Other Implications from the Executive Order: This is a Republican president directing his federal appointees, including the Attorney General and the Administrator of the DEA, to take steps that positively impact the cannabis sector. It suggests there could be a path for additional legislative changes, such as access to capital markets and banking services for state-legal cannabis.

There are several follow-on catalysts that could materialize over the next 12-18 months. With rescheduling, there is the opportunity for additional states to reform their cannabis laws (e.g. beginning or expanding medical programs) as some states have been reluctant to move forward with broader legislation while cannabis remained a Schedule I narcotic. Moving cannabis to Schedule III removes that reluctance, thereby increasing the legal US cannabis market. There are also several large states on the cusp of moving from medical to recreational/adult use, and the push for rescheduling could soften objections. Included in this discussion are significant medical markets including Virginia, Pennsylvania and Florida. The final catalyst to add as a follow-on to rescheduling is that MSOs generally trade around 5-6X EBITDA. Rescheduling would also translate to higher multiples, given the removal of punitive taxes, along with greater US market access. Overall, MSOs can become more attractive investment prospects.

Consumer Health

An area that is undergoing significant change, where traditional leadership is being challenged,d is in consumer health. Traditional pharmacy and retail consumer health providers are seeing their market share challenged by specialty providers. In our view, companies such as National Vision (EYE), Costco Wholesale (COST), and Amazon (AMZN) are winning in the provision of specialty health services, filling gaps that have emerged for convenience, price competitiveness and variety.

Costco has created a one-stop health and pharmacy distribution powerhouse for its members. The combined service offering is now three decades in the making, providing prescriptions, over-the-counter medications, vitamins and supplements as well as vision and hearing services. Costco members buy over-the-counter medications, allow for prescription refills and convenient home delivery. Costco pharmacists administer many vaccines, including the flu, respiratory syncytial virus (RSVs), hepatitis A and B, human papillomavirus (HPV), meningitis, polio, shingles, diphtheria, whooping cough and typhoid.

Costco Optical Centers offer scheduled appointments with independent optometrists where members can take their scripts to Costco opticians to buy eyeglasses and/or contacts. The Costco Hearing Aid Center offers free hearing evaluations. These specialty services are in addition to its VMS business (vitamins, minerals and supplements), gym equipment, as well as increasing inventory of healthier grocery items, farm-to-table offerings, vegan alternatives, in addition to a growing list of organic fruits and vegetables. We see COST as a preeminent provider of overall health and wellness products and services that, when one considers its global footprint, its whitespace still to exploit, in addition to its buying power, offers considerable benefits to members that should continue to be reflected in higher stock prices.

National Vision (EYE) is a US network of stores that provides eye exams, eyeglasses, contact lenses and related services, positioned for growth in a competitive environment

EYE was founded in 1990 and currently operates under four retail brands, each providing services to different segments of the eyewear market. America’s Best provides eye exams as well as eyewear solutions. Discount Contacts is an e-commerce-based platform providing a wide array of contact lenses at discounted prices. Vista Optical operates near military bases and within Fred Meyer stores (US northwest), offering value pricing and eye exams performed by independent optometrists. Eyeglass World operates a network of stores offering eye exams, contact lenses and same day prescription eyeglasses with in-store labs.  Revenue growth has been driven by higher-priced glasses and an increase in traffic from a change in market positioning, as well as a push to build its presence in offering services to managed care patients.

EYE has gone through a significant turnaround over the last two years, putting it on an upward trajectory. In 2023, EYE announced the end of an approx. 30-year relationship with Walmart. Another challenge that had to be fixed was that only 33% of customers were managed care patients, resulting in weaker sales during recessionary periods. Combined with cost cutting exercise to reduce overheads and changes in leadership, EYE has been put on a much better footing in 2025. Gross margins have increased on improved product margins of eyeglass frames and lenses, and growth in other add-on sales, which more than offset the dilution in contact lenses product margin and increase in optometrist-related costs.  These efforts result in reduced SGA expenses.

While efficiency gains are being realized, management has come to the end of a capital expenditure program, providing a tech and communications platform to perform remote eye exams. Patients come into a store, and the optometrist can perform the eye exam from another location, providing greater flexibility related to maintaining optometrists in multiple stores. In addition, EYE’s historical value-positioning in the eyecare market has helped as the trade down continues in retail, where EYE stores are seeing a greater percentage of customers coming from over $100,000 households and managed care is part of that. 

Health Tech

We continue to see significant progress and participation from health tech and info tech in the development of new medical discoveries, health management, pharmaceuticals and medical devices (med-tech) that we believe hold promise for continued performance growth in 2026. There are several companies in the portfolio within this area that include: Quest Diagnostics, Amazon, Microsoft, and Eupraxia.

(DGX) Quest Diagnostics stands out for its growth strategy, acquiring labs, genetic and molecular diagnostics, and health data analytics companies that serve healthcare providers, patients and insurers, operating an international network of care facilities in the US, Canada, Brazil, Mexico, and India. Most recently, during Q3-25, the company completed the acquisition of clinical testing assets of Fresenius Medical Care, enabling DGX to provide dialysis-related clinical testing. This acquisition follows an active 2024, when Quest completed eight acquisitions, including LifeLabs, which expanded its foothold in Canada.

Eupraxia (EPRX), is a Victoria BC based drug delivery company focused on slow-release mechanisms, developing its lead candidate EP-104IAR for osteoarthritis pain and pursuing a new formulation, EP-104GI, for eosinophilic esophagitis (EoE). This past summer, the company announced positive news related to its 1-year data from its ongoing RESOLVE trial in EoE, demonstrating strong efficacy and safety consistent with prior studies. The company announced that at 52-weeks post treatment, 67% of patients in different dosage regimens all remained in clinical remission. Other patients in the study demonstrated compelling improvements at week 36, with EoEHSS (EoE histologic scoring system) scores showing a 47% reduction in severity. Because patients with EoE typically undergo an annual biopsy to monitor disease progression, Research Capital analyst Andre Uddin suggests the one-year results provide support and validation for the drug delivery breakthrough that EPRX is developing. With the significant reduction in severity, there is promise that this investigational procedure continues to gain interest. In early January of this year, the company announced further results on its controlled drug delivery for applications with significant unmet need, with positive 12-week and 36-week tissue health data from its ongoing Phase 1b/2a part of the RESOLVE trial evaluating EP-104GI for the treatment of eosinophilic esophagitis (“EoE”). Dr. James A. Helliwell, CEO of Eupraxia, is encouraged especially with the highest dose patients as they are achieving near-complete normalization of tissue health in addition to significant improvements in symptom relief.

AMZN/AWS and Healthcare - it is our view that the influence of AWS in healthcare is unknown and therefore under-appreciated. It is reported that 19 of the top 20 global pharmaceutical companies use AWS for generative AI and machine learning. Further four of the top five genomic sequencing companies globally use AWS, while the top 10 medical device companies also use the infrastructure tech provided by AWS. From the early stage side of healthcare and life sciences, 80% of health tech unicorns are AWS customers. We also see that many healthcare providers use AWS as central to their electronic patient records management.

AMZN purchased One Medical (1Life Healthcare, Inc.) for $3.9 billion in February 2023. However, prior to the transaction, One Medical used AWS since 2007 as the backbone of its primary care service platform, including electronic health record (EHR) systems. Finally, AWS provides AI and machine learning services to assist with clinical data review and drug development for major pharmaceutical companies such as Pfizer and Johnson & Johnson.

MSFT and Healthcare - The New England Journal of Medicine (NEJM) states that Microsoft AI Diagnostic Orchestrator (MAI-DxO) is involved in successfully diagnosing up to 85% of NEJM case proceedings, a rate four times the rate of experienced physicians without the use of AI diagnostics. The result is that an inaccurate or delayed diagnosis becomes less likely in a world where digital tools are enabled to assist in early detection and tracking of patients. It is estimated that MSFT enabled services review over 50 million health-related files each day.

MSFT also collaborates with the health and sciences industries to lead the implementation of AI-enhanced models to assist with various medical discoveries. MSFT collaborates with Novo Nordisk (NOVO) to accelerate drug discovery and development for chronic diseases like diabetes and obesity. MSFT also works with Tevogen Bio to integrate machine learning into preclinical processes, focused on reducing the time and cost of T cell therapy (immunotherapy that modifies a patient’s cells to help destroy cancer cells. In terms of healthcare management Humana (HUM) one of the largest health insurance companies, uses Microsoft Cloud to develop predictive models that proactively identify when patients are close to a high-risk life-threatening event.