The Market Is Growing Again. The New York and New Jersey Operators Who Built It May Not Survive Long Enough to See It.

Here is the headline the cannabis industry has been waiting for: the U.S. legal market is growing again.

Whitney Economics released its annual forecast this week projecting that U.S. cannabis sales will climb to $30.5 billion in 2026, a 4.9% increase after what the firm called the first year-over-year revenue decline in the history of regulated cannabis in this country. The market shrank in 2025. Now it’s expected to expand. Sounds like a comeback story.

It isn’t, exactly. Not for the people who built this industry in the Northeast.

The fine print of Whitney’s forecast — and the numbers coming out of New York and New Jersey specifically — tells a different story. One about who captures a recovery, and who gets priced out of a market they helped create.

2025 Was Supposed to Be Different

When New York began issuing CAURD dispensary equity licensing delays license holders, the veteran-founded shops, the community-rooted independents — were supposed to get a shot at the kind of market California reserved for the well-capitalized.

Whitney Economics acknowledged what New York and Ohio delivered: in a year when 24 states saw cannabis revenue decline, the two were among the handful of bright spots that softened the national blow.

But being a bright spot in a bad year is not the same as being a healthy market. And on the ground in New Jersey, it doesn’t feel bright at all.

In Jersey City this winter, The Other Side Dispensary shut down — a disabled veteran-founded, equity-aligned operation that by every measure did what the state asked of it. The founders cited not market failure but municipal failure: unchecked license saturation, stalled oversight boards, corrupt stop-work orders, and a planning process that forced applicants through expensive approvals later waived for competitors. By the time the dispensary finally opened in October 2024, after more than 30 months of regulatory limbo, the market it was supposed to enter had nearly 60 licensed dispensaries in a city of 300,000 people.

“This business did not fail because of demand, performance or management,” said Dr. Alyza Brevard-Rodriguez, TOSD’s founder. “It failed because Jersey City created a regulatory environment where doing everything right still isn’t enough to survive.”

That’s not an isolated story. It’s a pattern.

The Structural Problem Rebound Numbers Don’t Fix

Whitney’s forecast comes with a warning the industry should take seriously: price compression is no longer a side effect of market maturation. It has become one of the forces defining the market itself. The firm revised its own forecasting model this cycle after accuracy dropped to 85% in 2025, largely because falling prices were moving faster than projected.

For consumers, falling prices sound like a win. And in some respects they are — cannabis has never been more accessible or affordable in the Northeast. But for operators running on thin margins, absorbing lease costs in Manhattan or Hoboken or Boston’s South End, paying into state tax structures that assume higher price floors, falling prices are an existential pressure.

New York’s market conditions illustrate the bind. Sales growth is real, but as analysts have noted, it’s no longer sufficient to offset the accumulated weight of strict compliance costs, federal banking disadvantages, and a regulatory structure that still penalizes cannabis businesses in ways their liquor store competitors haven’t faced since Prohibition. The Office of Cannabis Management has made progress, but the pace of the legal buildout remains slower than the illicit market’s ability to adapt.

New Jersey’s problems are different in flavor but similar in consequence. The market’s density — too many licenses issued too fast in urban centers, too little enforcement against illicit operators — has squeezed out the operators who were supposed to benefit most from legalization. Celebrity-backed dispensaries with capital cushions have closed. Veteran-founded equity operators have closed. What’s left standing, more often than not, is better-resourced.

What the Rebound Actually Means

Whitney Economics is not sounding an alarm. The firm sees meaningful growth through the rest of the decade, projecting the market moves higher from 2026 onward. That’s real. And New York, specifically, has structural advantages — population density, disposable income, and an improving regulatory environment — that should make it one of the stronger markets in the country by 2028.

But growth at the sector level doesn’t distribute evenly. It concentrates. A rising national revenue number can coincide with hundreds of small operators closing, because the economics of a maturing market favor scale: bigger buying power, more sophisticated marketing, easier access to financing (when financing is accessible at all under federal prohibition), and the ability to absorb price compression across a wider portfolio.

The Northeast’s equity promise — the idea that the communities most harmed by the war on drugs would get meaningful ownership in the legal market — was never going to survive on good intentions alone. It required the regulatory infrastructure to actually protect small operators long enough for them to compete. In New Jersey, that infrastructure failed. In New York, it’s still being built in real time, with the clock ticking.

What Should Come Next

There’s a Cannabis Inquirer’s legislative tracker sitting in Congress — the CLIMB Act — that would open SBA-style lending and investment access to state-legal cannabis businesses, including the small and minority-owned operators who still can’t get a basic business loan. It’s bipartisan and quietly gaining traction. It won’t be the whole solution, but it would make a material difference to the operators still hanging on in Newark, Harlem, and Providence.

States have a role too. License saturation caps, enforcement against illicit competition, and honest evaluation of tax structures that assume higher price points — all of it matters. The Northeast states that led on legalization now have an obligation to lead on market design.

The market is growing. The question is whether the people it was supposed to lift grow with it.

Dana Reeves is CannabisInquirer’s Northeast Correspondent, based in New York.