Even with new markets coming online, the U.S. cannabis industry isn’t growing like it used to.
In the first quarter of 2026, the number of active cannabis business licenses dropped by 1%, for a total of 36,169 cannabis nationwide, according to CRB Monitor, an intelligence firm that tracks and monitors licenses in the regulated industry.
That continues a two-year slide. The total number has declined for seven consecutive quarters – and it’s 9% less than it was two years ago.
“The decline extends a nearly unbroken three-year decline in licensed U.S. operators first evidenced in the fourth quarter of 2022,” CRB Monitor founder and CEO Steven Kemmerling said.
Still, the sharp drops of the past appear to be leveling off, suggesting the industry could be finding steadier ground.
Is cannabis licensing growth running out of steam?
Many established markets are shrinking, fewer licenses are being awarded, and some businesses are closing shop or merging with others.
Approved and pending licenses fell by 4% in the first quarter of 2026 to 4,175, down 18% from the same time last year.
That means fewer new companies are entering the industry.
But there’s a wrinkle: applications for new licenses, called pre-licensing activity, ticked up 4% this quarter, reaching 5,352.
Most of that action is concentrated in New York and Texas.
How much is New York distorting national cannabis licensing data?
New York is sitting on more than 85% of pending applications in the U.S., with 4,522 under review.
But only 46 applications were processed during the quarter – just 1% of the backlog.
Because New York’s numbers are so large, they’ve also skewed the national statistics. With so many applicants waiting, it’s tough for the overall industry to show real growth, according to the report.
Until the backlog eases, the market will likely keep reporting lots of “applications” but not as many new businesses.
Are legacy cannabis markets still in correction mode?
Licensees in mature cannabis states are still pulling back.
Oklahoma, where state officials have been hard at work denying existing licensees, saw another 5% drop in active licenses in the first quarter.
The number of cannabis permits in that state has dropped nearly by half over the last two years.
Enforcements and pauses on new licenses are the main reasons for the drop, but Oklahoma still has more cannabis businesses than any state except for California.
Michigan lost the most licenses, losing more than 300 businesses for an 8% decline. The state ended March with 3,719 licensed operators, a 10% drop since its high in fall 2024.
California’s numbers also continued to slip, losing 154 licenses in the first quarter.
California was among the four states that lost more than 50 licenses. The others were New Mexico, Oklahoma and Michigan.
Is New York driving the next wave of vertical cannabis licensing?
Vertically integrated operators — businesses that handle growing, processing and selling under one roof — have grown quickly in the past few years, but that’s slowing down.
That group’s license count grew by less than 1% in the first quarter, reaching 2,372 active licenses.
Much of the growth last year happened in New Mexico, which recharacterized nearly 600 existing operators as vertically integrated. The state ended the first quarter with 916 active vertically integrated operators – the most of any state.
New York is likely to continue to have the fourth-most vertically integrated operators as it works through more than 800 license applications from operators seeking the designation. New York ended the first quarter with 352 active vertical operators.
Even so, there’s more interest brewing. Applications for new vertical licenses are up by 16% to nearly 1,000 permits nationwide, with New York leading the surge thanks to its microbusiness license category.
Other license types, such as retail/dispensary, manufacturing/processing and distribution, are showing different patterns than vertical licenses:
- Cultivation licenses dropped 4% to 14,671 during the first quarter.
- Retail licenses, which fueled much of the industry’s growth, remained unchanged at 11,459.
- Manufacturing and processing licenses, the third-largest license type, remained unchanged at 5,143.
- Distribution declined 1% to 1,384.
Has Canada’s cannabis industry moved from expansion to equilibrium?
Canada’s licensing numbers hardly budged in the first quarter and showed no measurable growth over the past two years.
The total number of licensed businesses slid by just five since December, ending the quarter at 5,807.
No single license type moved more than 2% up or down. Canada has lost just 7% of its active licenses over the past two years, and the trend looks to be one of stability rather than growth.
New applications and approvals are rare, demonstrating that expansion mode has given way to a steady market.
“Licensed operators in the Canadian cannabis market have exhibited a degree of stability unknown in U.S. state markets, and the first quarter of 2026 was no different,” Kemmerling said.
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Has cannabis licensing growth hit a ceiling?
Overall, the North American cannabis market has moved out of its rapid-fire expansion phase.
In the U.S., new operators are finding it hard to break in, especially with application bottlenecks like the one in New York’s.
“Overall trends in new licensing activity suggest sluggish store growth in aggregate for cannabis retailers going forward,” Kemmerling said.
Margaret Jackson can be reached at margaret.jackson@mjbizdaily.com.
