By Tom Adams

To death and taxes, falling prices might be the legal cannabis industry’s contribution to the shortlist of life’s certainties. Every adult-use launch since Colorado’s in January 2014 has seen pricing crumble as the market rationalized around the product’s newly legal status via the rapid disappearance of the illegality premium consumers once granted the legacy trade for the risks it ran. No data suggests that process is over anywhere, although rates of decline are easing up in the most mature markets.

What the data does suggest is that mature markets may not need rising prices to post revenue gains. California just posted a 17.6% year-over-year gain in July, according to BDSA’s retail sales tracking, and consumer spending is now running 9.8% year-to-date, up from a restated 8.5% through June. Each of the last three months has made the year look better, and July’s was the best of them — while every category’s average price fell over the same period.

Nor is California alone. Massachusetts, Connecticut and Pennsylvania also crossed from decline into growth this year, and twelve of the twenty-two markets BDSA tracks are now growing in 2026. If mature markets can grow while prices fall, the industry’s future growth does not hinge on Texas, Pennsylvania, Virginia or Florida opening adult-use markets on timetables that politicians control.

The legal industry is four industries

Sorted by whether a market is growing or shrinking so far in 2026, and then by whether its rate of change is better or worse than its 2025 rate, the BDSA-tracked states are on one of four distinct trajectories (see table). In dollars they are nothing like equal: the seven markets growing faster than they did last year account for 37% of what the BDSA-tracked markets sell, and the five shrinking faster than in ’25 account for 23%. Those 22 markets are 87% of what America buys legally, and their 3.3% growth through seven months is a shade under the 3.4% inflation of the same period — in real terms the industry is not growing at all.

Source: Tom Adams Research analysis of BDSA retail sales tracking data, July 2026. Seven months to July 2026 against the same seven months of 2025; “faster” or “slower” compares that rate with the market’s own full-year 2025 rate.

California is the one that moves the national number on its own; at $3.1 billion over seven months it’s larger than the other six markets in its group combined. But its importance now goes way beyond size. Its growth offers hope to markets from Washington to Florida, and Maine to Arizona.

The industry can only hope the old saw holds: “As California goes, so goes the nation.” If other mature markets can return to growth even while prices continue to decline, the nationwide legal market that had been showing signs of stalling out in the $30-billion range may yet eclipse the illicit market it was supposed to replace (still worth $43.1 billion in BDSA’s current US model). Easing rates of price erosion on top of continuing unit-sales growth (never a problem) amount to a floor forming under the markets that already exist. Sustained growth off that new floor in mature, substantial markets is industry growth that does not depend on recalcitrant legislatures to legalize more states.

What separates California from Michigan, and Colorado

In California the value-added categories are driving the growth — vape spending up 17.4% and pre-rolls up 14.5% over the seven months, against flower’s 3.9%. Prices continue to erode, but volume increases are now able to drive revenue growth. But in Michigan the same categories are collapsing in dollars as price declines still outstrip volume gains: vape sales were down 15.2% over the same seven months, pre-rolls 11.1%, and edibles 26.8%. On volume, though, Michigan consumers are making exactly the same move as Californians: per-state tracking, vape cartridge pounds are up 35.9% and compound concentrates are up a whopping 122% since 2024.

The difference is what retailers can charge in those value-added categories. California prices fell in the half, but only by 0.4% (raw concentrates) to 5.4% (infused pre-rolls); Michigan’s revenue per pound across all inhalables fell by a third over the past two years, from $1,827 to $1,219. Both California and Michigan had robust medical markets before launching adult-use sales in 2018 and 2019, respectively, so both have had about the twelve years since Colorado launched the adult-use era in 2014 to build categories that hold a price, and only one of them did: California-launched STIIIZY (vapes), Jeeter (pre-rolls) and Kiva (edibles) were already flagship products for three of the country’s ten largest brand houses by 2022 (“House Party,” Global Cannabis Times, August 2023).

The poster child for cannabis market maturation syndrome is Colorado, down 41% from its 2021 spending peak and another 6.5% in 2026 so far. Its adult-use plants in cultivation are down 58% from their 2021 peak and cultivation licenses down 45%. But it is well positioned for a return to growth: retail stores are down only 4.4% from their 2025 peak, and at 114 per million residents its store density trails only Oregon’s among the eight markets here. Vireo Growth bought 17 Colorado dispensaries from PharmaCann in December for $49 million, taking it to 41 stores in the state, after taking control of Schwazze by buying 86% of its defaulted notes two months earlier. Buying retail in a shrinking mature market is a bold move few others have dared, a gamble that attrition on the supply side means repricing is nearly finished and profits can ensue.

Access is what matters

The lesson for other states is that where regulators allow stores, people buy legally when their black- and gray-market options are limited. Michigan has 82 retail licenses per million residents, and they spend $312 a head in licensed shops; California has just 44 per million and residents spend $122 per capita. That relegates it to the underperforming group (see graph) that includes access-starved Arizona, Illinois and Ohio.

Source: Tom Adams Research analysis of BDSA and state regulator data. Store/license counts as published by each state.

California has no state cap on stores. Its limit is municipal: 302 of California’s 540 cities and counties allow no retail cannabis businesses. More than half the jurisdictions in the state have decided, for now, that their residents should buy from somebody unlicensed. The two markets in BDSA’s tracking where store counts are fixed by statute, Arizona at 22 per million and Illinois at about 16 per million, both sit low on spending per resident. That is what a starved market looks like from the operator’s side, and it is not all gloom, since it tends to lead to higher average prices, more revenue per store and better margins.

Regulators have to get out of the way

But industry growth is essential for a bunch of companies selling themselves to investors as growth stories. And the California recovery suggests that growth from here is a conversion project rather than a legalization one. The illicit trade was worth $51.4 billion when Colorado opened the legal era and is still worth $43.1 billion, against $30.9 billion of licensed cannabis; another $24.6 billion of cannabinoid demand runs through hemp shops and filling stations and $1.7 billion through pharmacies — the pharmacy share almost entirely Epidiolex, a CBD medicine for childhood seizure disorders that medical cannabis companies first brought to desperate parents and a pharmaceutical company only later monetized at premium prices.

Total American cannabinoid demand is therefore near $100 billion and the licensed channel holds under a third of it. Every one of those dollars is reachable in principle — the hemp share through the pending federal ban (and state enforcement of unknown success), the illicit share by opening stores, and even the pharmacy share by a legal industry that could sell the same CBD molecules for a fraction of Epidiolex’s price once parents trust what is on the dispensary shelf. None of that conversion would require another state to legalize anything.

The running room for growth already exists in some of the country’s largest states. Ohio’s legislature set a ceiling of 400 dispensaries in December and the state has only 227; New York has no ceiling and a municipal opt-out that closed permanently at the end of 2021, so its access can only widen; California needs no new state law at all, only city councils to change their minds and open the local tax spigot.

Every state that has let the stores open has discovered the demand was already there, buying somewhere else. And that has been the legal industry’s chief contribution so far to life’s certainties: people love cannabis and will get it where they can.

Tom Adams is President and Principal Analyst at Tom Adams Research, and has covered cannabis markets since 2016. He was previously Managing Director of BDSA’s Industry Intelligence group and Editor-in-Chief of Arcview Market Research.

Tom Adams Research advises operators, investors and regulators on where cannabis markets are going and which regulatory regimes produce healthy ones. adamsresearch.net