The number of active U.S. cannabis business licenses – including those in regulated medical and recreational markets – continued to decline through the third quarter of 2024 as reductions in established markets outpaced growth in emerging ones.
The trend could continue into 2025 as the number of approved/pending licenses – an indicator of future growth – also slipped almost 4% during the quarter.
Active cannabis business licenses in U.S. marijuana markets peaked at 44,300 in late 2022 and have been declining since.
There were roughly 38,600 active cannabis business licenses in the third quarter of 2024, a 1% slide from the previous quarter, according to CRB Monitor’s latest licensing activity report.
Licenses also declined by almost 11% in 2024 in comparison to the first three quarters of the year to the same period in 2023.
Industry experts attribute the downturn in licenses to a tightening economy along with regulatory restructuring in some states that have caused a deep reduction in the number of licenses awarded and maintained.
Oklahoma, for example - once known for its unlimited cannabis licenses - has cut the number of active medical marijuana licenses by almost half.
At the beginning of 2022, the state had about 14,000 active licenses, according to data from Cannabiz Media, a cannabis market intelligence company.
As of October, the number of licenses had decreased to 6,078.
California - arguably the largest marijuana market in the world - also has been shedding licenses for several years now.
Cannabis businesses in California peaked in June 2022 with roughly 13,000 active licenses and have declined every quarter since.
The state lost 4% (or 371) of its active licenses in the third quarter of 2024 and ended the quarter with 8,800 licenses.
Despite the dip, California still leads the nation in active cannabis licenses.
Established markets such as Colorado and Nevada also are experiencing sustained license declines, while the adult-use markets of Oregon and Washington state have remained somewhat stable.
Emerging markets have helped to negate license declines in mature states.
In fact, the number of new licenses issued in the third quarter of 2024 increased 9% over the second quarter, according to analysis by Cannabiz Media.
A total of 2,211 licenses were issued in the third quarter, with more than 900 of those issued in August.
“When looking at newly issued license counts, it is important to delve into the data to determine why there are spikes and dips,” said Ed Keating, chief data officer at Guilford, Connecticut-based Cannabiz Media.
“In Q3 2024, we found that New York and Ohio led the way in new store and manufacturing licenses.
“The data shows that the increases were driven by New York’s increased velocity in license issuance, while Ohio surged thanks to new adult-use licenses.”
Oklahoma is another example where understanding the data is important, Keating said.
The state added more than 500 licenses in the third quarter, but many of those were cultivation permit renewals that were granted a new license number.
Michigan, which has been challenging California in cannabis production and sales, nearly neutralized California’s losses by adding more than 330 licenses in the third quarter, an increase of 8% over the previous quarter.
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And after a slow launch to its recreational marijuana market, New York has been aggressively expanding this year, almost tripling the number of licenses active at the end of 2023.
The state added 435 licenses in the third quarter to reach 1,115 active cannabis licenses, a 64% increase from the previous quarter.
The expansion is expected to continue through the fourth quarter and into 2025, as there are almost 930 pending/approved licenses waiting to open in New York.
Connecticut, New Jersey and Washington, D.C. each experienced double-digit growth for active cannabis licenses in the third quarter, but they added only 65 licenses combined to the national total.
And while still a miniscule part of the nationwide licensing picture, active licenses for marijuana social clubs grew 30% to 21 licenses in the third quarter and have almost doubled since 2022.
Despite industrywide license consolidation in the third quarter, Steve Kemmerling, CEO of Nashville, Tennessee-based CRB Monitor, sees opportunity ahead.
“As businesses adapt to evolving regulations and consumer demands, trends like social-use clubs and vertical integration signal a dynamic future,” Kemmerling told MJBizDaily.
Andrew Long can be reached at andrew.long@mjbizdaily.com.