WHERE CURIOSITY MEETS LUXURY
TaylorMarchand
Report on U.S. Adult Use
Introduction & Market Research
Cannabis Market Evaluation
Tenax Strategies developed a comprehensive evaluation matrix to assess the regulated U.S. legal adult use cannabis markets. This tool aims to assist Taylor Marchand in identifying promising markets for the introduction of a new branded product line. Out of the 23 states with established regulatory frameworks for legal adult use cannabis, we highlight the top seven (7) opportunities and rank all 23 states for further consideration.
The evaluation considered eleven (11) critical factors influencing market viability, focusing on product manufacturing, retail, and cultivation sectors. Data sources included the U.S. Census, MJ Biz Factbook 2024, and state regulatory websites to gather pertinent details on licenses, sales, median income, population, brand presence, market growth, and market maturity. Detailed information for each state, complete with source documentation, is available in the attached U.S. Adult Use Cannabis Market Evaluation.
Key Findings
The top seven market opportunities are New Jersey, Massachusetts, California, Colorado, Michigan, Illinois, and Washington. These states boast the highest median incomes, substantial annual sales revenues, large consumer bases, and market maturity, reflecting stable conditions in pricing and broad consumer acceptance of cannabis.
State-Specific Insights
New Jersey: New Jersey emerges as one of the most promising markets, distinguished by its rapid growth and dynamic expansion. The state boasts 1.6 million consumers, contributing to approximately $1 billion in cannabis sales, supported by the second-highest median income of $99,781. New retail establishments are on the rise, accompanied by an increased supply of raw materials from the 2024 class of licensed cultivators. This surge in supply is expected to drive price compression, which could lower the average retail price from the current rate of $60 per eighth (1/8th) of flower and wholesale prices of $10,000 per liter for distillate However, geographic discrepancies persist as 70% of municipalities have opted out of allowing adult-use cannabis operations, resulting in market saturation in some areas and deserts in others
California: As the largest market by population of adults over 21, California remains the original and often initial market for new brands With $4 4 billion in sales and 6 7 million consumers, it represents an expansive opportunity However, it is challenged by heavy taxation, a pervasive legacy market, and significant geographic areas still prohibiting legal cannabis operations The market is further complicated by its five distinct product manufacturing licenses, differentiated primarily by extraction methodology Although California is not to be overlooked, it is not necessarily the optimal first entry market for new participants
Michigan: As the second-largest cannabis market with $3 2 billion in sales and 1 7 million consumers, Michigan is undergoing notable transitions With neighboring Ohio having opened its adult-use cannabis market in mid-2024 and forthcoming regulatory changes expected in 2025, the market dynamics are shifting Michigan currently benefits from an abundance of raw materials and substantial price compression, offering an attractive prospect for launching a product line at reduced costs
Illinois: Illinois ranks as the second-largest by consumer count at 2 1 million, with annual sales reaching $1 7 billion Though experiencing growth, the market confronts several challenges, including licensing delays, legal issues from past licensing procedures, and a significant presence of multi-state operators Its bifurcated licensing approach with separate Craft Grower and Infuser licenses as opposed to the more comprehensive licenses seen elsewhere affects entry strategies Nevertheless, attrition in licenses could lower entry barriers and support cost-effective entry into this market
Colorado: Despite its pioneering status, Colorado's cannabis market is marked by a downturn, driven by price compression, oversupply, and intensified rivalry from newer legal markets Still, with its established legal market of over ten years serving 1 million consumers and generating $1 1 billion in 2024 sales, Colorado remains a viable market
Massachusetts: With the highest median income of $99,989, $1 5 billion in sales, and 1 2 million consumers, Massachusetts offers a compelling entry point Ongoing price compression has facilitated opportunities for smaller operators, particularly as multi-state operators vacate positions Licensing is capped at three for each business type (retail stores, 100K sq ft canopy across three locations, and three product manufacturing sites), making it difficult for large operators to maintain dominance The state’s geography, bordering four other states, including non-adult-use New Hampshire, expands its consumer base Despite a regulatory body experiencing challenges, new opportunities such as the forthcoming Social Consumption licenses in 2025, present compelling prospects for market entry and brand development
Washington: Similar to Colorado and Massachusetts, Washington faces challenges from an oversaturated market and regulatory limitations, leading to a halt in accepting new license requests However, despite these hurdles, the state retains 1 3 million consumers generating $1 1 billion in sales, supported by a median income of $94,605 Opportunities persist, particularly through purchasing existing licenses in this seasoned market
Market Entry State Ranking
License Research Summary
In our analysis, Tenax Strategies reviewed the licensing structures across all U S states with legalized adult use cannabis markets, focusing on requirements for product manufacturing and retail operations This was achieved through comprehensive examination of resources such as the 2024 MJBiz Factbook, individual state regulatory websites, and mjbizdailycom
Among the 23 states analyzed, ten have reached their licensing caps, including Washington State However, the remaining states continue to offer active licensing opportunities
Most states maintain a straightforward "producer license," which authorizes the holder to engage in activities such as purchasing, extracting, infusing, packaging, and labeling Cannabis Infused Products (CIPs) including beverages, edibles, vapes, and more. These products can then be sold wholesale to retailers.
One notable exception is California, which adopts a more nuanced approach to licensing based on the extraction methodology. The state issues distinct licenses for processes involving volatile and non-volatile solvents, as well as for different stages of production, namely:
Type 6: Non-Volatile Solvent Manufacturing (methods include CO2 or water extraction).
Type 7: Volatile Solvent Manufacturing (using substances such as butane).
Type N: Product Infusion (for product creation).
Type P: Packaging and Labeling.
Type S: Shared-Use Facility Operations.
Understanding the licensing landscape is critical for planning market entries, determining cost structures, and aligning with state-specific regulatory requirements. This detailed assessment provides a roadmap for comprehending the intricacies of the U.S. cannabis market's licensing environment.
Licensing Table
Conclusion
The evaluated states, particularly New Jersey, California, Michigan, Illinois, Colorado, Massachusetts, and Washington, represent mature, lucrative markets for launching new cannabis brands and product lines. These markets not only host vast numbers of experienced consumers but also support market entry amidst normalized pricing and accessible business conditions. Taylor Marchand’s identified target market segments are well-represented, providing strategic entry opportunities in well-established environments.