US Legal Cannabis Sales Fell 3% in 2025, the First Annual Drop on Record, as Prices Sank

US legal cannabis sales fell about 3% in 2025, to an estimated $29.1 billion, the first yearly decline Whitney Economics has recorded since it began tracking the market.

People kept buying. Michigan stores sold a record volume of cannabis and still took in $113 million less. Massachusetts logged a record number of sales with revenue flat. New York more than doubled its store count and kept growing at double-digit rates.

Where the money went

The drop came from prices. Whitney Economics blamed excess supply in nearly every medical and adult-use market, which pushed prices down and squeezed margins. In its 2026 cannabis industry report with First Citizens Bank, Whitney put legal growing capacity at about 73 million pounds a year against combined legal and illicit demand of about 50 million pounds.

The shelf data shows the same thing. Across the 16 states Headset tracks, the average basket fell from $49.10 to $47.03 in the 12 months to September 2026, while transactions rose 5.8% and units rose 4.8%. Shoppers made more trips and bought more items, and each trip cost less.

State numbers fill in the picture:

• Michigan: a whole ounce of flower averaged $58.22 at the end of 2025, after prices fell 16% during the year, according to Cannabis Regulatory Agency figures reported by MLive. Stores sold nearly 260,000 more pounds of flower than in 2024, a record.
• Colorado: retail marijuana sells for just over $600 a pound, the lowest since the state began tracking prices in 2014, KKCO reported in March, citing the Department of Revenue.
• Ohio: even in a growing market, the average gram of flower fell from $6.85 to $6.41 over the year to January 2026, and the average manufactured product fell from $26.66 to $23.83.
• Massachusetts: retailers logged 46.3 million transactions in 2025, about 3.4 million more than 2024, while the state's regulator said average prices kept slipping.

Whitney also pointed to cautious shoppers. In a March release, the firm said consumers facing inflation and uncertainty were buying only what they needed.

State by state

Most of the large, older markets shrank in 2025. The two biggest gains came from states that were still opening stores or had just started adult-use sales.

*Illinois switched its sales tracking to Metrc during 2025. The state says the new system records prices after discounts at checkout, while older data often captured pre-discount prices. Part of the Illinois drop is a change in how sales are counted. Items sold in the state rose.

California's licensed sales fell for a third year in a row. The state's cannabis excise tax rose from 15% to 19% on July 1, 2025, before lawmakers rolled it back effective October 1, and the illicit market remains a drag. Units barely moved, falling from 210.4 million to just under 209 million, so most of California's drop came from lower prices.

Colorado's 2025 total was its fourth straight annual decline, and early 2026 kept going: January and February sales were down 3.4% from a year earlier.

The estimates don't agree

There is no single official count of US cannabis sales, and the analysts who estimate it disagree on both the size of the market and whether it shrank.

Whitney's own figures have moved. A February estimate put 2025 at $29.1 billion to $29.6 billion, a projected drop of 3.2%. A later report with First Citizens Bank used a range of $28.6 billion to $29.6 billion. By March, Whitney had settled on $29.1 billion, the figure repeated in its June jobs report.

NORML, writing up that jobs report on June 25, called the year one in which sales "held firm" above $29 billion. It's the same number with a gentler reading. NORML noted that the report's authors blamed falling prices for the dip.

A higher figure circulates too. A December 2025 year-end piece in Cannabis Science and Technology, with charts drawing on BDSA data, put 2025 at $23.9 billion in adult-use sales and $7.6 billion in medical, or $31.5 billion. That article ran before the year ended, and BDSA hasn't published a final 2025 total we could find. By that count, 2025 was no decline at all.

Headset measures a narrower slice: 16 states, using point-of-sale data from retailers. In those states, dollar sales were up 1.5% in the 12 months to September 2026, to $24.6 billion. Eight of the 16 grew and eight shrank.

What every source agrees on is the gap between volume and dollars. More product is moving through legal stores, and it's selling for less.

New York and Ohio pulled the other way

Whitney said the national decline would have been steeper without New York and Ohio.

New York's market grew because it finally had stores. The Office of Cannabis Management counted 556 licensed adult-use dispensaries open as of November 30, 2025, up from 261 in 2024, and said cumulative adult-use sales since legalization passed $2.5 billion. In Headset's data, New York sold $1.86 billion in the 12 months to September 2026, up 22.1%, the second-fastest growth of any state it tracks.

Ohio led that list. Its first full year of adult-use sales brought in more than $836 million in 2025, and Headset shows the state at $1.30 billion over the 12 months to September 2026, up 26.7%.

Both states are young markets, where new stores pull buyers from the illicit market and from neighboring states. Whitney's March release said that kind of conversion slows as markets mature, which is where the West Coast already is. In Headset's latest data, California, Oregon, Washington and Nevada all shrank, with Nevada down 12%.

The businesses that didn't make it

Lower prices hit growers and retailers first. More than 4,000 cannabis businesses gave up their licenses over an 18-month period, Whitney estimated.

Some of the larger operators went with them. The Cannabist Company, a multistate operator, began a restructuring in an Ontario court in March 2026 to sell its businesses and wind down, and filed for Chapter 15 recognition in Delaware on March 25. Judge Brendan Shannon granted recognition on May 9. Cannabis companies can't use regular US bankruptcy because the drug is federally illegal, so the case drew attention as a possible route for others.

TerrAscend said in June 2025 it would sell all its Michigan assets, four cultivation and processing sites and 20 dispensaries, after its executive chairman called Michigan an extremely difficult market. Trade press reported in May 2026 that the company's Michigan business had been placed in receivership after a loan default.

What's coming

Whitney expects the market to grow again in 2026, forecasting $30.5 billion, up 4.9%. That's well below the 13.4% growth it had once projected for the year, and the firm said it now expects single-digit growth to be normal.

Headset's numbers through September 2026 point to modest growth so far, with dollars up 1.5% in its 16 states. Prices are still the swing factor. Average baskets keep shrinking, and growth depends on states adding stores faster than prices fall.

Michigan is the test case for taxes. A 24% wholesale tax took effect January 1, 2026, and sales fell 8.3% in January from a year earlier. Headset found sales recovered to about $253 million a month by June and argued the tax sped up a decline that was already under way.

The next full-year estimates for 2026 will arrive early next year. New York, with more licenses still in the pipeline, will likely be one of the few large states pushing the total up.