Where Is The Cannabis Market Going?

Let’s go back to 1996 when California became the first state to legalize medical cannabis (Prop 215 the Compassionate Use Act – gotta love CA’s props) for people to possess, grow, and distribute. Keep in mind that those efforts have been underway since 1972. Twenty years later, in 2016, after the legalization of medical cannabis, the state legalized regulated consumer cannabis use. (Prop 64). Ten years later, in 2026, the industry is an absolute mess.

The California government is attempting to fix the market with consolidation and is finally going after the illegal market. Sales have declined, the illicit market is still higher than the legal market, and prices have plummeted, making it tough for everyone, starting with the farms. Taxes are still insanely high, yet the state will bring in $260 million in revenue with very little government oversight or smart laws to help the industry grow.

In NY, Cuomo signed the Compassionate Use Act in 2014. The first out of the gate was medical licenses, and many, including multi-state operators, jumped into this game with the hope of pivoting to all consumers when the state legalizes consumer cannabis use. Cuomo finally made cannabis legal for all consumers in 2021, to change the narrative of abuse coming out of his office. Good for us and bad for us because he didn’t care how this all played out. Massive mistakes out of the gate, even though NYS could have looked to other states to avoid making the same pitfalls.

For all of us to move forward as an industry, federal legislation is key, but there is ample work at the state level to help an industry struggling to become profitable and grow. Medical use is such a key component of this industry, and it is time that the consumer dispensaries embrace that. Places like Long Island should be required to allow dispensaries. After all, if they can’t secure real estate, they can’t exist, and this benefits the market and consumers. These decisions not to have dispensaries in LI were made by the city council in a vacuum, rather than letting the people decide. That has to change. We must also be able to distribute and sell the product outside our four walls, at farmers’ markets and events, just like wine stores do.

There is still an opportunity for NYS to lean in to building new businesses (farmers, dispensaries, brands) from a new group of entrepreneurs before federal legislation is enacted. Those tax dollars in CA are significant, but think about how much bigger they could be. The Governor and the OCM should talk to those on the front line, stop making legislation in a vacuum, and, if anything, figure out how to speed up decisions.

If I were a betting person, I would not be betting on the slew of multi-state operators; they might have been too early to the party. I can only look to the tech businesses that were too early but spot-on. At one point, the funding dries up. Time will tell, but all of us in the trenches are looking for conversations to make the industry better. Let’s have them.