U.S. Cannabis Licensing Market Holds Steady in Early 2025 as License Growth Slows and Market Maturity Deepens

Cannabis Licensing Stabilizes with Minimal Growth After Years of Market Contraction

The U.S. marijuana business licensing market entered 2025 on a stable footing, reflecting a cooling phase following years of expansion, corrections, and cautious optimism. According to newly released data from cannabis market intelligence firm CRB Monitor, the total number of active licenses in regulated medical and recreational marijuana markets across the United States reached 38,509 by the end of the first quarter. This represents less than 1% growth compared to the end of 2024, suggesting that the market has settled into a slower, more sustainable rhythm.

This stability follows a turbulent period marked by a 13% contraction in total licenses over the previous two years. Licensing activity plateaued in the third quarter of 2024, and current figures suggest that the surge of new entrants has largely waned.

Fewer New Entrants as Approved and Pending Licenses Decline Across the Country

While the number of existing operators remained relatively unchanged, the pipeline for future entrants showed clear signs of deceleration. The number of approved or pending licenses dropped 5% to 5,095, continuing a trend of declining quarterly approvals. Additionally, applications awaiting approval fell 12% to 5,493, reflecting a backlog and slowed administrative processing, particularly in states with burgeoning but delayed adult-use markets.

This ongoing reduction in licensing activity signals increasing caution from entrepreneurs, regulators, and investors alike. Businesses appear to be adjusting to more competitive market conditions, tighter margins, and a shift in focus from expansion to operational efficiency and profitability.

Emerging Adult Use States Drive Remaining Growth in License Activity

The marginal increase in active licenses was largely supported by a handful of high-growth markets. Massachusetts, New Jersey, and New York played pivotal roles in propping up national figures, despite regulatory slowdowns and complex rollout phases in some areas.

New York, for instance, continued to experience delays in processing a substantial backlog of cannabis business applications, yet its overall contribution to license growth remained noteworthy. These states demonstrate the ongoing shift in growth leadership from legacy states such as California and Oregon to newer entrants in the adult-use market.

California Sees Modest Licensing Recovery After Years of Steep Decline

California, the nation’s largest cannabis market, recorded its first quarterly growth in more than three years. The number of active licenses in the state rose by 1% to 8,530, signaling a potential turning point after the market shed approximately 30% of its operators over the past two years.

This mild rebound may indicate a stabilization in the state’s cannabis economy following years of over-licensing, intense competition, and challenges related to enforcement, compliance, and illicit market suppression.

Michigan Faces License Losses in Q1 2025 Despite Long-Term Growth Trajectory

Michigan maintained its position as the third-largest cannabis market in terms of license volume, but it also saw a net decline in active licenses during the first quarter of 2025. The state closed the quarter with 4,148 active licenses after shedding 138 permits, a 3% decrease.

Despite this short-term dip, Michigan’s licensing numbers still reflect a 17% year-over-year growth rate, highlighting the state’s long-term upward trajectory and resilience in a maturing market environment.

New Mexico Emerges as the Nation’s Fastest-Growing Cannabis Licensing Market

In contrast to the cooling trends seen elsewhere, New Mexico posted the highest quarterly growth in cannabis licenses, issuing 644 new licenses during Q1 2025—a staggering 27% increase. This remarkable surge is attributed to a permissive regulatory environment that has encouraged rapid market entry, drawing comparisons to Oklahoma’s early days of marijuana licensing.

As New Mexico’s industry expands at a breakneck pace, market watchers will be attentive to how regulators balance growth with oversight, aiming to avoid pitfalls that have challenged other high-growth states.

Oklahoma’s Moratorium Continues to Compress Active Licenses Amid Regulatory Crackdowns

Oklahoma, once the frontrunner in total cannabis business licenses, continued its dramatic contraction as a result of ongoing enforcement actions and a state-imposed licensing moratorium. The number of active licenses dropped by 379 during the quarter, bringing the total down to 5,823—a 53% reduction over two years.

Despite these losses, Oklahoma still holds the second-largest share of cannabis business licenses nationwide, illustrating the scale it reached during its period of regulatory leniency.

Additional State Highlights Reflect a Mixed Licensing Landscape

Several other states contributed meaningfully to national licensing activity. Connecticut led in terms of percentage growth, expanding its license base by 51%. Illinois grew by 17%, while New Jersey and Maryland followed with 16% and 11% growth, respectively. Vermont, although small in absolute numbers, posted the largest per capita increase with 52 new licenses granted during the quarter.

Importantly, the quarter saw no significant license contractions—defined as greater than 10%—among established cannabis markets. This suggests that while growth is slowing, the industry is not experiencing the widespread retrenchment seen in previous years.

The most notable license reductions occurred in Oklahoma (-379), Oregon (-218), and Michigan (-138), with other states either holding steady or posting modest increases. This reflects a balancing act as markets find their saturation point and adjust for long-term sustainability.

Consumption Venues Emerge as a Bright Spot in the Licensing Ecosystem

Amid an overall trend of stabilization and slow growth, one sector stood out: cannabis consumption venues. This relatively new category experienced robust expansion in the first quarter of 2025, with licenses for social-use lounges growing 183% since the end of 2024.

In total, 68 clubs are now licensed nationwide—nearly four times the number recorded one year earlier. This surge was driven in part by New Mexico joining states like Colorado, Michigan, and Nevada in legalizing and implementing frameworks for public consumption sites.

As consumer preferences evolve and normalization of marijuana use progresses, social-use venues represent a promising new frontier for industry growth, community engagement, and tourism development.

A Turning Point in U.S. Marijuana Licensing: From Expansion to Optimization

The first quarter of 2025 represents a defining moment for the U.S. cannabis industry, as it transitions from an era of rapid expansion to one focused on operational discipline and market maturity. The stabilization of license volumes, coupled with shrinking approval pipelines, reflects a natural progression toward a more sustainable business landscape.

While growth opportunities remain in select emerging markets and innovative sectors like consumption venues, the broader trend points to a plateau in licensing activity. For entrepreneurs and investors, success will increasingly depend on differentiation, compliance, and profitability not just market entry.

As regulatory regimes tighten and competition intensifies, cannabis operators across the country will need to adapt to a business environment where the rules of the game have fundamentally changed. The era of unchecked expansion is giving way to a period defined by strategy, scale, and sustainability.