Evolving Cannabis Retail Landscape Sees Shifts in Billion-Dollar State Markets

LOS ANGELES — The U.S. cannabis industry, still in its nascent stages, witnessed notable shifts in 2023 with a projected reduction in states reaching the billion-dollar mark in retail sales, according to a comprehensive report by Cannabis Business Times.

Eight states are expected to achieve this benchmark, down from nine in 2021. Traditional leaders like California, Colorado, and Washington continue to maintain a strong position despite declining trends. Meanwhile, market contraction in Oregon and Nevada has slightly reduced the count of states in the billion-dollar club. Missouri stands out, poised to join this league, eyeing a potential $1.3 billion in combined adult-use and medical sales based on monthly data from the state’s Department of Health and Senior Services.

It’s essential to underscore the rapid progression of the cannabis industry. Nine of the 20 states that implemented commercial adult-use cannabis sales did so since early 2022, marking a swift expansion in just 18 months. For perspective, the first 11 took nearly seven years to initiate their programs. BDSA, a market intelligence provider, forecasts a 12% nationwide growth in cannabis sales, aiming for a total of $29.6 billion by year-end. Notably, the 12 most prominent markets are projected to contribute over two-thirds of this figure.

Here’s an analytical breakdown of 2023’s potential top-performing retail markets:

• California: Despite experiencing a projected 7.1% year-over-year decline, California remains dominant with a forecasted $5 billion in adult-use sales. For a direct comparison with other states, only cannabis subjected to California’s excise tax (approximately 69% of taxable sales) is accounted for, estimated at $3.5 billion.
• Michigan: Among the frontrunners, Michigan has demonstrated remarkable resilience. The state could register over $2.9 billion in combined adult-use and medical sales, marking a 27% year-on-year surge.
• Illinois: A modest 0.5% increase from 2022 positions Illinois to possibly achieve over $1.9 billion in combined sales.
• Massachusetts: Despite the onset of competition and price compressions, the state is projected to maintain its fourth position nationally, with estimated sales over $1.75 billion.
• Colorado: A projected sales total of $1.57 billion marks an 11.5% decline from 2022.
• Arizona: The state’s 2023 cannabis sales, estimated at $1.36 billion, remains static when juxtaposed with its 2021 figures.
• Missouri: As the newest entrant, the state is on track for a potential $1.35 billion in combined sales.
• Washington: Projected sales of $1.23 billion indicate a 4.8% drop year-over-year.

Emerging and mature markets like Oregon, Nevada, Maryland, and New Jersey also continue to shape the industry. While the former two experienced declining trends in 2023, Maryland and New Jersey are pegged to achieve around $766 million and $729 million, respectively.

Despite the ebb and flow in individual state sales, the overall landscape reflects the burgeoning potential and rapid maturity of the U.S. cannabis sector. Industry stakeholders and analysts remain optimistic, closely monitoring these shifts and their implications for the years ahead.