8 States Projected to be Billion Dollar Cannabis Markets in 2023

In 2023, there are eight adult-use cannabis states that are projected to eclipse the $1-billion benchmark in total retail sales from their respective markets.

But here’s the kicker: That’s one fewer than in 2021.

While dispensary sales in mature markets like California, Colorado and Washington remain comfortably in the 10-figure range this year despite falling trends, shrinking numbers in Oregon and Nevada means the billion-dollar ranks are now a little less crowded.

Missouri, which Cannabis Business Times projects to surpass $1.3 billion in combined adult-use and medical sales this year, based on monthly data from the state’s Department of Health and Senior Services, will be the lone newcomer.

But the industry yardstick shouldn’t only be used to measure the behemoths in the U.S. cannabis space. Notably, nine states—among the 20 that have implemented commercial adult-use cannabis sales—have launched their programs since the beginning of 2022.

These nine emerging markets came about in 18 months. Meanwhile, it took seven years for the first 11 adult-use programs to get going.

As a result of the newcomers, cannabis sales nationwide are projected to grow 12% by the end of 2023, reaching $29.6 billion, according to market intelligence provider BDSA. Notably, the 12 largest adult-use markets will account for more than two-thirds of that 2023 total.

Here, CBT provides projections for the top-performing retail markets in 2023:

(Editor’s note: While Florida’s medical market is also projected to record more than $1 billion in cannabis sales in 2023, this analysis includes adult-use states only.)

*California sales are for adult-use retail transactions only and include cannabis, cannabis products and tangible personal property. The other seven states include combined totals for adult-use and medical cannabis sales. 

Combined, these eight states’ 2023 cannabis sales estimates are projected to eclipse $17 billion, or nearly 60% of the nationwide total, yet they represent less than 30% of the U.S. population.

(Scroll down to see an analysis of four mid-tier markets that account for another $3.3 billion.)

California

Despite its pitfalls, California remains the world’s largest cannabis market in 2023 with projections to record roughly $5 billion in adult-use sales for the year. This projection, which represents a 7.1% year-over-year market decline, is based on first-quarter taxable sales reported to the California Department of Tax and Fee Administration (CDTFA).

And the 10-figure estimate is no surprise: California has been the nationwide leader since first launching adult-use sales in January 2018. During that inaugural year, adult-use dispensaries reported $1.98 billion in taxable sales.

And while the CDTFA has traditionally recorded “taxable sales,” which include sales of cannabis, cannabis products, and other retail sales of tangible personal property (such as a T-shirt), the department is now providing a separate total for actual cannabis sales in 2023.

Based on first-quarter data, the actual amount of cannabis sold that is subject to the California’s excise tax is projected to be roughly $3.5 billion in 2023, or about 69% of the “taxable sales.” This offers a more apples-to-apples comparison to other state markets.

Prior to 2023, the CDTFA did not track this lower amount that is derived from sales subject to the state’s cannabis excise tax.

Michigan

Among the billion-dollar cannabis markets, Michigan remains an outlier with respect to its year-over-year growth.

Based on sales figures through the first seven months of the year, Michigan retailers are projected to record more than $2.9 billion in adult-use and medical cannabis in 2023, representing a 27% increased from last year, according to data from the state’s Cannabis Regulatory Agency.

And this $2.9-billion projection is a conservative estimate following recent upward sales trends in June ($260.8 million) and July ($276.7 million)—much greater than the 2023 monthly average of $243.3 million. Considering recent months, the second half of Michigan’s year will likely lead to more than $3 billion in sales for 2023.

Overall, cannabis demand in Michigan is the highest among adult-use states in the nation with an average monthly spend of $23.42 per capita in 2023, more than three times that of California, according to a CBT market analysis.

Illinois

Although Illinois’ cannabis retail market has hit a growth flatline in 2023, the Land of Lincoln is projected to report more than $1.9 billion in combined adult-use and medical sales this year based on monthly averages through July, according to the state’s Department of Financial and Professional Regulation.

The 2023 estimate represents a roughly $10-million increase (or 0.5%) compared to 2022 sales, and this modest uptick comes despite Missouri, which shares more than 350 miles of real estate along the Mississippi River with Illinois, launching adult-use sales in February 2023, the first of Illinois’ five bordering states to do so.

The resulting impact on Illinois sales was immediate. The state’s adult-use sales attributed to out-of-state residents dropped from 31% in 2022 to 25.5% during the first half of 2023—accounting for an average difference of roughly $6.5 million per month.

Still, 2023 marks Illinois’ fourth-consecutive year cracking the $1-billion benchmark.

Massachusetts

Regardless of new competition in New England and compressed prices on the shelves, Massachusetts will represent the fourth-largest cannabis market in the nation this year with more than $1.75 billion in adult-use and medical sales. This projection, which represents a 0.1% decline from 2022, is based on sales data through July from the state’s Cannabis Control Commission (CCC).

Licensed Massachusetts dispensaries reported $154.6 million in July, their largest sales month so far this year, despite Vermont (October 2022), Rhode Island (December 2022), New York (December 2022) and Connecticut (January 2023) all launching adult-use sales within the past year.

The Bay State is also maintaining its overall sales total amid the average price for adult-use flower dipping from $288 per ounce in July 2022 to $176 per ounce in July 2023—a 39% decrease in 12 months—according to the CCC.

Colorado

Colorado cannabis sales are projected to take another deep cut in 2023 with an estimated $1.57 billion in combined adult-use and medical sales for the year, representing an 11.5% decline compared to 2022, according to data from the state’s Department of Revenue (DOR).

Through the first half of 2023, Colorado is averaging nearly $17 million per month less in sales when compared to the average monthly figures for all of 2022, according to DOR. And this sales decline is only a continuation of a 21% year-over-year slip Colorado retailers experienced in 2022.

The pioneer of the adult-use marketplace, Colorado has cracked the billion-dollar mark every year since 2016, but 2023 sales figures will be more in line with how the state performed in 2018.

Arizona

Arizona hit the ground running at full speed when it launched adult-use cannabis sales in January 2021, just 80 days after voters passed Proposition 207 in the November 2020 election. Licensed retailers sold more than $1.36 billion in adult-use and medical cannabis in that first year, according to the state’s Department of Revenue.

But Arizona’s emerging retail market hasn’t emerged much since. The state’s 2023 cannabis sales are projected to mirror 2021’s total at $1.36 billion based on monthly averages through May, representing a 2.7% decline from last year’s $1.4 billion total.

Missouri

Since launching adult-use sales on Feb. 3, 2023, Missouri is well on its way to becoming the lone newcomer to the billion-dollar cannabis club this year.

Based on monthly sales data through July, Missouri dispensaries are projected to sell $1.35 billion in combined adult-use and medical cannabis in 2023, according to data from the state’s Department of Health and Senior Services. And that’s without any adult-use sales for January.

With roughly 6.2 million residents, Missouri will also be the least populated state to cross the 10-figure sales threshold this year.

Washington

State cannabis sales in Washington are projected to reach $1.23 billion in combined adult-use and medical transactions this year, representing a 4.8% decrease compared to 2022, according to data from the state’s Liquor and Cannabis Board.

This trend comes after Washington’s retail market peaked at $1.43 billion in 2020 and $1.48 billion in 2021—years that were followed by a 12.3% slip in 2022.

Nonetheless, the bleeding has appeared to slow, and 2023 will mark Washington’s sixth consecutive year as a billion-dollar retail market.

Robust Markets

In addition to the eight billion-dollar markets, mature adult-use programs in Oregon and Nevada as well as emerging programs in Maryland and New Jersey are projected to surpass $700 million in cannabis sales for 2023.

CBT research analysis

Oregon

After recording more than $1.1 billion in sales in both 2020 and 2021, Oregon’s cannabis retail market remains on a downward trend with a projected $952 million in adult-use and medical sales for 2023, according to monthly sales averages from the state’s Liquor and Cannabis Commission.

This estimate represents a 4.3% decline from 2022 sales, when licensed retailers withstood a 15.9% year-over-year dip.

Nevada

Nevada cannabis dispensaries are projected to sell roughly $859 million of adult-use and medical cannabis in 2023, representing a 2.6% decline from 2022, according to monthly sales data through May from the state’s Department of Taxation.

This comes after Nevada retailers recorded $1.04 billion in sales in 2021, which was followed by a 15.4% market slide in 2022.

Maryland

Maryland’s cannabis retailers recorded more than $87.4 million in adult-use and medical sales in July, according to the state’s Cannabis Administration, and that’s only the beginning. Adult-use sales launched July 1 and accounted for $51.2 million in the opening month.

The Free State’s medical market included more than $241 million in sales for the first half of the year, and should July’s combined sales total be replicated through the second half of the year, then Maryland will finish 2023 with roughly $766 million in cannabis sales overall.

Early signs are pointing toward a billion-dollar market in 2024.

New Jersey

New Jersey cannabis retailers are projected to record roughly $729 million in adult-use and medical sales in 2023, according to monthly data through June from the state’s Cannabis Regulatory Agency.

But the $60.8 million monthly sales average from the first half of 2023 was stagnant from the third and fourth quarters of 2022, despite New Jersey launching adult-use sales in April of last year. Some stakeholders in the space, notably Curaleaf, anticipated greater market growth following that launch and have since scaled back cultivation operations.

The lack of increased demand, in part, is due to only 36 adult-use dispensaries having opened their doors in the 16 months since the state’s commercial sales launch. That equates to roughly 0.4 dispensaries per 100,000 people in New Jersey.

State regulators have received 2,177 adult-use license applications and approved 1,399 as of Aug. 8, 2023. More than half of the applications submitted are for dispensary permits from those hoping to enter the space. Many of these aspiring entrepreneurs have had their business plans held up by municipal delays as well as real estate and funding challenges.