The U.S. cannabis industry continued to change quickly during the first half of 2025. Some state markets experienced rapid growth, while others struggled with oversupply, falling prices, and stricter enforcement.

Federal reform also remained uncertain. The SAFER Banking Act stayed in legislative limbo without a clear timeline for passage. Meanwhile, the introduction of the STATES 2.0 Act created another possible path toward federal cannabis reform.

This 2025 cannabis market update examines which states are thriving, where conditions are becoming more difficult, and how businesses can prepare for the remainder of the year.

Thriving Cannabis Markets: Where Opportunity Knocks

New Jersey: Social Equity Fuels Growth

New Jersey’s cannabis market expanded significantly during the first half of 2025. Total active licenses increased by 33%, following an 82% increase in 2024.

Key market highlights include:

• Multistate operators (MSOs) hold 23% of the market, leaving room for smaller businesses.
• Cannabis sales reached $1 billion in 2024, approximately 25% higher than in 2023.
• The state increased its Social Equity Excise Fee from $1.24 to $2.50 per ounce.
• A new $5 million Cannabis Business Development Grant offers reimbursements of up to $75,000 to early-stage licensees.

Municipal regulations remain a challenge because each of New Jersey’s 564 municipalities can establish its own cannabis rules. However, the state’s commitment to social equity and business development continues to create opportunities for cannabis companies and service providers.

New York: Consistent Licensing Drives Expansion

New York’s cannabis market maintained its momentum from 2024. Active licenses increased by 93% during the first half of 2025, despite the market’s early challenges.

Key market insights include:

• MSOs hold only 3% of the market, which remains dominated by independent operators.
• Cannabis sales reached $995 million in 2024.
• The New York Cannabis Control Board issued 268 new adult-use licenses during the first half of 2025.
• The state now has more than 1,700 adult-use licenses and 366 operating dispensaries.
• Regulators have signaled plans to slow the issuance of cultivation licenses because of possible oversupply.

For ancillary service providers, New York’s newly licensed businesses represent a valuable target market. These operators may need technology, financial services, compliance support, and other business resources.

Massachusetts: Legislative Changes Create Opportunities

Massachusetts remained a stable cannabis market in early 2025. Total active licenses increased by a modest 1%, while legislative changes created new opportunities for future growth.

Notable developments include:

• Adult-use cannabis sales reached a record $1.64 billion in 2024.
• MSOs control 17% of the market.
• The Massachusetts Cannabis Control Commission released regulations for social consumption sites in April 2025.
• A cannabis reform bill passed in June 2025 and will increase the adult-use retail license cap from four to six.
• More municipalities are approving cannabis businesses because of potential tax revenue and economic benefits.

If social consumption regulations move forward, entrepreneurs and established operators may need new technology, payment, compliance, and business support services.

Ohio: Steady Expansion in America’s Heartland

Ohio’s cannabis market showed strong potential during the first half of 2025. Retail licenses increased by 34%, while total cannabis sales reached $230 million in the first quarter. Adult-use sales accounted for $164.3 million of that total.

Key developments include:

• MSOs hold 54% of the market, indicating that larger companies dominate the industry.
• Purchase limits for recreational consumers more than doubled in June 2025.
• The state continues to issue licenses across the cannabis supply chain.
• Pending legislation, including SB 56, could affect the adult-use framework.

Because the regulatory environment may continue to change, businesses operating in Ohio should monitor legislative developments closely.

Cannabis Markets Facing Challenges

Vermont: Temporary Licensing Suspension

Vermont’s cannabis market experienced a slight decline during early 2025. Active licenses decreased by 1% after increasing by 11% in 2024.

The Vermont Cannabis Control Board also temporarily stopped accepting new cultivation license applications because of concerns about market saturation.

Other important factors include:

• Only 80 of Vermont’s 237 towns allow adult-use cannabis sales.
• Regulators have described the licensing pause as temporary and data-driven.
• Cannabis sales reached $128 million in 2024, more than double the previous year’s total.

Michigan: Oversupply Creates Market Pressure

Michigan’s cannabis market experienced a significant contraction during the first half of 2025. Total active licenses declined by 10% after increasing by 27% in 2024.

This reversal suggests that the market is undergoing a correction.

Key challenges include:

• Adult-use flower prices fell to a record low of $39 per ounce.
• Industry associations are lobbying for a pause on new licenses.
• Only about 10% of Michigan’s more than 1,700 municipalities allow adult-use cannabis businesses.
• Smaller businesses face increasing pressure from oversupply and competition.

As these pressures continue, further market consolidation appears likely.

Oklahoma: Regulatory Crackdown Continues

Oklahoma’s medical cannabis market continued to contract in early 2025. Active licenses decreased by 15% after falling by 55% in 2024.

The decline reflects the state’s ongoing effort to bring its previously uncontrolled market into compliance.

Key factors include:

• A two-year moratorium on new medical cannabis business licenses remains in effect through August 2026.
• A four-year moratorium affecting dispensaries, growers, and processors continues to reduce the number of licenses.
• Regulators have increased compliance inspections and enforcement against unlicensed operators.
• Despite the contraction, the market generated approximately $716 million in retail sales.

Emerging Market: Nebraska Prepares for Medical Cannabis

Nebraska voters approved medical cannabis legalization in 2024 with 70.7% of the vote.

The Nebraska Medical Cannabis Commission was expected to begin issuing licenses by October 1, 2025. Regulations were due by July 1, 2025.

Although the law took effect in December 2024, Nebraska’s dispensary market was not expected to become fully operational until 2026.

Federal Cannabis Developments

Cannabis Rescheduling Remains on Hold

The DEA hearing on moving cannabis from Schedule I to Schedule III was postponed indefinitely in January 2025. At the time, officials had not announced when the hearings might resume.

Meanwhile, lawmakers continued to consider several bipartisan proposals. These bills addressed cannabis research, banking protections, and interstate commerce.

STATES 2.0 Act Gains Attention

The STATES 2.0 Act could significantly change federal cannabis policy. The proposal would update the Controlled Substances Act and protect state-legal cannabis businesses from federal interference.

The legislation would also:

• Permit interstate commerce between legal cannabis markets.
• Give cannabis businesses access to tax deductions currently prohibited by IRS Code 280E.
• Establish a potential framework for federal cannabis regulation and taxation.

If passed, the bill could create substantial opportunities for cannabis businesses and their service providers.

Hemp Industry Reaches a Crossroads

The 2018 Farm Bill was extended through the 2025 crop cycle. However, lawmakers continued to consider major changes to federal hemp policy.

A Senate Agriculture Committee draft proposed several changes:

• Redefining hemp based on total THC, including THCA.
• Limiting industrial hemp to non-cannabinoid portions of the plant.
• Creating a certified seed pilot program.

Uncertainty surrounding these proposals affected business activity. In early 2025, potential hemp reforms reportedly brought merger and acquisition activity to a “screeching halt.”

State-Level Hemp Developments

Florida: Operators Use the Hemp Loophole

Florida’s hemp licenses cost only $650 per year, making them far less expensive than medical cannabis licenses. This difference encouraged several major operators to enter the hemp-derived THC market.

In April 2025, Curaleaf converted a medical dispensary into “The Hemp Company.” The store began selling Farm Bill-compliant THC products to adults without medical cannabis cards. Other operators, including Trulieve, began pursuing similar opportunities.

California: Regulators Target Intoxicating Hemp

California introduced and enforced an emergency ban on intoxicating hemp products. State officials reported 99.7% compliance among licensed businesses.

The ban prohibits detectable THC in hemp-derived foods, beverages, and supplements. It also limits sales to consumers who are at least 21 years old.

Tennessee: New Regulatory Framework

Tennessee passed legislation in May 2025 that transferred hemp oversight from the Department of Agriculture to the Alcoholic Beverage Commission.

The legislation includes:

• A ban on THCA and synthetic cannabinoids.
• A restriction limiting sales to licensed, in-person retailers.
• New licensing levels and testing requirements.
• A 6% retail sales tax in addition to a wholesale tax.

Strategic Recommendations for 2025

Cannabis businesses and service providers can take several steps to pursue opportunities during the second half of 2025.

1. Reassess target markets. Consider shifting resources toward expanding markets such as New Jersey, New York, Massachusetts, and Ohio.
2. Use account-based marketing. Identify valuable accounts in promising markets and create outreach campaigns based on their specific challenges.
3. Invest in reliable data. Accurate and current industry data can help businesses identify opportunities and make informed decisions.
4. Evaluate marketing performance. Review campaigns from the first half of 2025 to identify what worked. Continue investing in successful strategies instead of starting over.
5. Maintain accurate CRM data. Update contact information, reassign accounts from former employees, and confirm that sales territories are accurate.

Conclusion

The cannabis industry presented a complex mix of challenges and opportunities in mid-2025. New Jersey, New York, Massachusetts, and Ohio showed signs of growth. In contrast, Vermont, Michigan, and Oklahoma faced licensing restrictions, oversupply, or increased enforcement.

Federal and state policy changes also continued to influence the industry. Cannabis rescheduling remained uncertain, while new proposals addressed banking, interstate commerce, taxation, and intoxicating hemp products.

By targeting healthy markets, using reliable data, and refining their sales and marketing strategies, cannabis businesses and service providers could position themselves for success through the remainder of 2025.

This analysis is based on data from Emerald Intel’s Cannabis Market Brief: 2025 Mid-Year Snapshot.