Cannabis Business Licensing in the U.S. Declined in 2023

Stephen Andrews
04 Mar 2024

A new report shows that the number of active marijuana business licenses in the United States declined for the first time in 2023, following years of double-figure growth. Demand for licenses was highest in new and emerging markets like New Mexico, New York and Vermont, while most licenses were abandoned or lost in established markets, such as California and Colorado.

Active U.S. cannabis business licenses declined 4% between 2022 and 2023, according to a report from CRB Monitor, a cannabis intelligence company that tracks and traces licensing in the sector. 

Both medical and recreational marijuana markets were included in the monitoring. In addition, the report included figures from the Canadian market, where the number of active business licenses has gone up by 2%. 

The report notes that, since 2019, the total number of active licenses in the two neighboring countries has almost doubled every year. However, year-over-year growth slacked to 28% in 2022. 

Cannabis licensing in the U.S. and Canada was at its peak during the first quarter of 2023, when it climbed to a total of 51,000. But licensing slowed down later in the year. At the end of 2023, the number of active cannabis licenses stood at 49,000, which is a 2% decrease from 2022. 

In the view of CRB Monitor CEO Steve Kemmerling, this could be a sign the industry is consolidating, he told MJBizDaily, which first published the report insights. 

“As painful as it is for individual participants caught up in it, (consolidation) is a healthy reaction that will set up the industry for sustainable future growth,” he said. 

Cannabis Licensing Past Its Peak 

The number of active U.S. marijuana licenses was highest in the fourth quarter of 2022, with 44,300 licenses registered. Roughly 1,900 active licenses were abandoned or lost by the end of that year, according to the report. 

In 2023, there was an influx of newly approved businesses, mostly in emerging markets. A 23% growth was observed between the months of January and September. However, this could not match with the losses that accumulated in the established markets. 

License application peaked in the beginning of 2023 at about 8,900, but at the end of the year it was down 20% from 2022. 

Most new active licenses are registered in New Mexico, where regulators have granted 600 permits since 2022. Following behind is New York where 360 licenses had been added, and Vermont with 239 new licenses on the count for the same period. 

Michigan was a rare exception among the established markets. Regulators in the Great Lake State contributed with more than 500 active licenses in 2023. The spike can be explained with Detroit finally entering the cannabis sphere after years of delay. 

Most other established markets struggled with financial distress and many business owners opted out of business. 

Decline in active cannabis licenses has been observed in California, which is the world’s biggest weed marketplace, but also in Colorado, Illinois, Nevada, and Washington. 

By type of license category, the sharpest decline is seen in vertically integrated businesses. Between 2022 and 2023, the number of active vertically integrated weed business licenses fell for 42%. 

It’s the second year in a row that these businesses decline. By the end of 2023, there were 875 active vertically integrated licenses, according to the report. 

The decline can be associated with the exit of many multistate operators from recreational markets. An example is Curaleaf which pulled out from California, Colorado and Oregon in the beginning of last year. 

The company said in an announcement at the time that the “proactive exit will generate additional cash and improve margins in non-SAFE banking environment.”

In Canada, the situation is somewhat different, according to the CRB report. A significant number of Canadian cannabis shop owners closed throughout 2023, however, the number of newly-issued cannabis licenses kept a steady pace. 

Canada reportedly ended the year with 6,860 active marijuana licenses, which represents a 2% year-over-year growth. Canadian recreational weed sales also increased during this period, and totaled US$ 3.8 billion, according to MjBizDaily

Also read on Soft Secrets:

Detroit Issues First Recreational Retail Licenses

New York Grants First Batch of Growing Licenses

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Stephen Andrews