Cannacurio #64: 2022 Year-End Cultivation Leaderboards

Following up on our recent review of dispensaries and retailers, we now delve into cultivation licenses. These “census” snapshots derived from our Cannabiz Business Intelligence™ platform show where new licenses are being created and where the balance of power is from market to market. Customers use this information for go-to-market strategies as it may inform their sales territories, trade show planning, and marketing spend.  

Key Findings

1. Regulators issued 33% fewer cultivation licenses in 2022 compared to 2021.
2. Oklahoma still leads the US in new licenses, despite a moratorium effective on August 26th.
3. 77% of last year’s new licenses came from California, Oklahoma, and Michigan.  
4. Massachusetts issued only 10 cultivation licenses, perhaps owing to the price pressure in the Bay State.

The following table is the year-end snapshot of new cultivation licenses added by month this year:

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

One of the most significant observations is that on the whole, fewer licenses are being issued. We tallied 9,010 new cultivator licenses in 2021 and 6,010 in 2022. This is a good sign for the cannabis economy as there is too much supply. Cannabiz Media views licenses as a lagging indicator since some states only remove them from the rolls after expiry, so we view the contraction as real and significant.

Regulatory Changes

In our last Cultivation Leaderboard Report issued midyear, we shared some regulatory policies that are or will be having an impact on cultivation licenses. Most of these have been on schedule. There have also been pleas for moratoriums in states like Colorado, Michigan, and most recently, Massachusetts. The flood of legal licenses along with the vigor of the legacy market have been driving the price of cannabis down, to the detriment of many license holders.

• California: Effective January 1, 2023, the California Department of Cannabis Control will be able to issue Large Indoor and Large Outdoor licenses, which are 22,000 square feet and greater than 1 acre, respectively. Will we see some growers consolidating licenses just for ease of compliance? Application fees for these licenses range from $1,555 to $8,655 with annual license fees pegged at $13,900 to $77,905. This will reduce the license count but probably not the canopy.

• Oklahoma: Starting in August 26, 2022 and continuing through August 26, 2024, Oklahoma stopped accepting new grower, processor, and dispensary licenses. Existing license holders in good standing will we able to renew their licenses. The state has the option to shorten this window.

• Oregon: The state is still operating under a new license moratorium since January 2022.  

The table below is a snapshot of the total cultivation licenses by state as of December 2022. Six states account for just about 90% of the licenses: California, Oklahoma, Michigan, Oregon, Colorado, and Washington.

Conclusion

The rate of license issuance is slowing, though 90% of the licenses exist in six states. The reduction in new licenses may help to chip away at the oversupply of cannabis and falling wholesale prices that cultivators have had to contend with. You can read the report we worked on with Wells Fargo that discussed that phenomenon here.   

As the Northeast grows and continues to add legitimate license holders, what will happen to the oversupply in the west that is being shipped east?  We will continue to track these trends and will update you in future posts.

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.

About the 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 multijurisdictional 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.