The biggest exodus of marijuana cultivation is after the license was revoked

The US cannabis industry continued to contract in the third quarter of 2025 due to exits from cultivation, according to licensing data from intelligence firm CRB Monitor.

The number of active cannabis business licenses in the US fell to 37,555, a 1% decrease from the previous quarter, continuing a multi-year slide that began at the end of 2022.

Over the past two years, the total number of active licenses across the country has decreased by 13%.

Marijuana growers accounted for most of the loss of licenses during that time. Cultivation permits decreased by 24%, or just over 5,000 licenses, from the third quarter of 2023, while sales licenses decreased by only 330.

At the same time, the prospect of future growth has weakened. Approved, pending and previously licensed applications were denied for the fifth quarter in a row.

“This continued decline in the growth pipeline reflects a cautious, strategic stance among entrepreneurs and investors,” said CRB Monitor CEO Steven Kemmerling.

Risk appetite has decreased due to market saturation, regulatory constraints and institutional changes, making capital more attractive.

The exception is in new and emerging markets like New York, Kemmerling said.

“Excitement is always high only when it is thought that a new, great opportunity still exists.”

The expansion of the New York marijuana market has the potential to grow nationally

The national total also hides significant differences between mature markets and newly introduced regions for senior use.

“While established markets like California, Oklahoma, and Michigan continue to converge, all meaningful growth is driven by the new frontiers of the elderly — and New York is an undeniable hotbed,” Kemmerling said.

The Empire State alone accounts for the largest number of all applications for commercial licenses and static licenses.

New York’s ongoing rollout “completely distorts the national pipeline,” Kemmerling said.

New York led the nation in the growth of active business cannabis licenses in Q3, adding 155, up nearly 9% from the previous quarter. The state ended the quarter with nearly 1,910 active licenses, up 71% year over year.

That growth is set to continue in 2026. New York’s marijuana regulators were processing about 4,600 pending permit applications at the end of the third quarter.

But pending litigation and leadership wrangling could derail that rollout.

Felicia Reid, who has been leading the Office of Cannabis Management since mid-2024, resigned abruptly at the governor’s request earlier this month amid the fallout of a major federal investigation into alleged marijuana inversions involving millions of dollars in production.

New York highlights a critical reality, according to Kemmerling.

“The future expansion of this industry now depends entirely on the successful issuance of authorizations in new states with large populations,” he said.

The California and Oklahoma cannabis markets continue to cool

Licensed businesses continued in the third quarter to come out of the heaviest establishments in California and Oklahoma, which account for 36% of all active marijuana licenses in the US.

California, the nation’s largest cannabis market with an estimated $4 billion market, still leads the country with 8,048 licenses.

But both the number of legal businesses and legal sales have been steadily declining as the state grapples with regulatory burdens, high taxes and a strong illegal market.

Active licenses in the state fell by about 2% last quarter and 8% from the third quarter of 2024.

To put this number in perspective, California’s marijuana market has lost more licenses in the past 12 months (740) than the total number of licenses in Arizona and Nevada combined (654).

A moratorium on new permits in Oklahoma, set for 2022 after the state’s low barrier to entry created uproar, continues to reshape the state’s full market by slowly reducing the number of workers.

The market has lost more than one-fifth of its licenses in the past 12 months, ending the third quarter of 2025 with approximately 5,380 active licenses.

Canadian cannabis licensing is stable

The Canadian cannabis market, while also down 1% in the third quarter, remained stable, with active licenses down to 5,760.

But that stability follows a two-year decline of 15%, underscoring the market’s continued maturation and consolidation.

The quarter also showed a modest increase in new applications, albeit from a historically low base.

Active Canadian cultivation licenses fell 2.3% from the previous quarter to nearly 900 and are down 8% from the third quarter of 2023.

Licenses to sell marijuana, the largest category of licenses in Canada, have changed since 2023 but have remained largely unchanged at about 4,100 licenses.

Trump’s marijuana reform may not jumpstart the growth of the marijuana industry

Markets rallied after reports that President Donald Trump could soon issue an executive order classifying marijuana as a highly dangerous drug began to circulate last week.

Moving cannabis to Schedule 3 of the Controlled Substances Act will open up huge tax breaks for cannabis businesses and could convince cautious investors who have been reluctant to enter the market until now.

This could change the need for US cannabis businesses and licenses through 2026, but significant questions and uncertainties remain about their potential impact.

Until then, data from the third quarter of 2025 confirms that the era of unchecked growth for the cannabis industry is over, Kemmerling said.

“Now we’re seeing a long recovery period, with active licenses declining for nearly three years in a row,” he said.

“This is not a sign of industrial failure, but rather of its maturity—markets are shedding excess capacity and underperforming workers, paving the way for a stable, efficient, and ultimately sustainable sector.”

Andrew Long can be reached at andrew.long@mjbizdaily.com.