Cannacurio #72: Cultivation 2023 Q1 Leaderboard

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. As a result of moratoriums and market pressures, the rate of adding new cultivation licenses is down in most jurisdictions.

Key Findings

1. Regulators issued only 42% as many licenses in Q1 2023 versus Q1 2022.
2. Oklahoma’s share of all U.S. new cultivation licenses issued was 67% in January, 46% in February, and 20% in March as the moratorium takes effect.
3. 76% of last quarter’s new licenses came from three states: Oklahoma (54%), Michigan (12%), and California (10%).

The following table is the quarter-end snapshot of new cultivation licenses added by month this year. Oklahoma’s January issuance accounted for 36% of all the licenses issued nationwide for the quarter!

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The following table compares the quantity of new cultivation licenses in the first quarter over the last three years. The trend is obvious, though there are still thousands of existing licenses that are managing to renew year after year. It is doubtful that the supply glut will not end anytime soon.

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In looking at the month-to-month issuance for the previous 27 months, there has definitely been a downward trend – except for an Oklahoma spike in September 2023:

Regulatory Changes

In our year-end Cultivation Leaderboard Report, we highlighted some regulatory policies that were having an impact on cultivation licenses. 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. So far, only two of those have been issued, which would affect around 40 licenses total
• Oklahoma: Starting in August 26, 2022 and continuing through August 26, 2024, Oklahoma stopped accepting new grower, processor, and dispensary licenses. It appears that the state must have had a giant backlog to work through as they have continued to issue new licenses. OBNDD, the second cannabis regulator, estimates that several thousand cultivation licenses are illegitimate and may fall off the rolls at some point.
• Oregon: The state is still operating under a new license moratorium from January 1, 2022 through March 31, 2024.  

The table below shows the total number of cultivation licenses we are tracking. The nationwide total is down 1,073 (-4.7%) from year-end 2022 while California is down 894 (-11.6%):

Conclusion

The vast majority of cultivation licenses are still centered in a handful of states. California, Oklahoma, Michigan, Oregon, and Colorado account for 82%. This oversupply continues to feed into the black market that makes its way to states with and without cannabis programs. It will continue to drive downward price spirals in many markets.  

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 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.