Cannacurio #88: Cultivation 2023 Year-End Leaderboard

Following up on our recent review of dispensaries and retailers, we now delve into cultivation licenses. These “census” snapshots are derived from our Cannabiz Business Intelligence platform where we track new license issuance and where the balance of power is from market to market. Over the last ten years, customers have used this information for go-to-market strategies, competitive assessments, and TAM analyses.

Key Findings

1. Regulators issued 62% fewer cultivation licenses in 2023 compared to 2022
2. Michigan issued almost 35% of this year’s new cultivation licenses
3. 78% of last year’s new licenses came from California, Oklahoma, and Michigan

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The rate of new license issuance is drastically down from past years. We tallied only 2,253 new licenses being issued last year compared to 6,010 in 2022. In 2021 that number was 9,010! There are a number of factors that can explain this:

• Oklahoma’s moratorium finally kicked in. Regulators issued 332 new licenses in Q1 but only 15 more over the last nine months.
• Some California growers signed up for the Large license option. We tallied 42 of those and they allow growers to consolidate smaller licenses with this new credential. This will decrease the license count even though the number of farms may remain stable.
• As flower prices fell, the number of overall licenses has declined from 22,484 to 18,707 – suggesting that farmers have left the industry.

The following table is the year-end snapshot of new cultivation licenses added by month last year. Michigan surged to the top of the Leaderboard in 2023 and added more than the next two states combined (CA and OK). Vermont rounded out the top four with 217 new licenses.

In looking at the month-to-month issuance, there has definitely been a downward trend – really driven by the larger issuing states:

Regulatory Impact

As we discussed in past posts, regulatory changes have had an impact on new and existing cultivation licenses.  

• California: Effective January 1, 2023, the California Department of Cannabis Control issued Large Indoor, Outdoor, and Mixed licenses. These are respectively 22,000 square feet and greater than 1 acre respectively. 42 have been issued so far and the annual license fees were set at $13,900 to $77,905.
• Oklahoma: Oklahoma issued a moratorium starting on August 26, 2022. It was extended to 2026 as the legislature and regulators worked to reign in a program that had run amok. The state has shed almost 2,500 cultivation licenses this year going from 7,075 to 4,605 (-35%).
• Oregon: The state is still operating under a new license moratorium since January 2022 though these are scheduled to end in April 2024.  

The table below is a snapshot of the total cultivation licenses by state as of December 2023. 6 states account for just about 83% of the total licenses: California, Oklahoma, Michigan, Oregon, Colorado and Washington.  Last year those same 6 states accounted for 90%.

Conclusion

The rate of license issuance dropped drastically, and total licenses are down as well. Cannabiz Media has also tracked a reduction in the number of farms nationwide. There are a multitude of reasons for this with oversupply and legacy market likely at the top of the list. With each state functioning as a siloed market, this phenomenon will continue.  

As the Northeast slowly comes online – we expect to see more licenses being issued. Two states we will monitor include Vermont, which is temporarily halting the issuance of new licenses for large-scale cannabis growers in a bid to protect smaller, local cultivators; and New Hampshire exploring distribution similar to their state’s liquor program.

Cannabiz Media customers can stay up-to-date on these and other new licenses through our newsletters, alerts, and reports modules. Subscribe to our newsletter to receive these weekly reports delivered to your inbox. Or you can schedule a demo for more information on how to access the Cannabiz Media License Database yourself to dive further into this data.

Author

Ed Keating is a co-founder of Cannabiz Media and oversees the company’s data research and government relations efforts. He has spent his career working with and advising information companies in the compliance space. Ed has managed product, marketing, and sales while overseeing complex multi-jurisdictional product lines in the securities, corporate, UCC, safety, environmental, and human resource markets.  

At Cannabiz Media, Ed enjoys the challenge of working with regulators across the globe as he and his team gather corporate, financial, and license information to track the people, products, and businesses in the cannabis economy.  

Ed graduated from Hamilton College and received his MBA from the Kellogg School at Northwestern University.

Cannacurio is a weekly column from Cannabiz Media featuring insights from the most comprehensive license data platform. Catch up on Cannacurio posts and podcasts for the latest updates and intel.