Cannacurio #64: Year-End 2022 Cultivation Leaderboards

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Following our recent dispensary and retailer review, we now look at cultivation licenses. Derived from our Cannabiz Business Intelligence™ platform, these “census” snapshots 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 can influence their sales territories, trade show planning and marketing spend.

Important 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 that went into effect on August 26.
3. 77% of last year’s new licenses came from California, Oklahoma and Michigan.
4. Massachusetts only issued 10 cultivation licenses, perhaps due to price pressures in the Bay State.

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

Looking at monthly emissions, there is definitely a downward trend – really driven by the larger emitting nations:

One of the most important observations is that fewer licenses are issued overall. We counted 9,010 new breeder licenses in 2021 and 6,010 in 2022. This bodes well for the cannabis economy as there is too much supply. Cannabiz Media views licenses as a lagging indicator as some states only remove them from listings after they expire, so we see the contraction as real and significant.

Regulatory Changes

In our most recent Cultivation Leaderboard Report, published mid-year, we shared some regulatory guidance that impacts or will impact cultivation licenses. Most of these are on schedule. Moratoria was also advocated in states such as Colorado, Michigan and most recently Massachusetts. The flood of legal licenses combined with the dynamics of the legacy market has pushed the price of cannabis down to the detriment of many licensees.

• California: Effective January 1, 2023, the California Department of Cannabis Control may issue licenses for large indoor spaces and large outdoor spaces that are 22,000 square feet or more than 1 acre. Will we see some growers pooling licenses just to make compliance easier? Application fees for these licenses range from $1,555 to $8,655, with annual license fees ranging from $13,900 to $77,905. This will reduce the number of licenses, but probably not the canopy.

• Oklahoma: As of August 26, 2022 and through August 26, 2024, Oklahoma stopped accepting new grower, processing, and dispensing licenses. Existing license holders in good standing can renew their licenses. The state has the option to shorten this window.

• Oregon: The state is still operating under a new licensing moratorium as of January 2022.

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

Conclusion

The license issuance rate is slowing, although 90% of licenses exist in six states. Reducing new licenses can help curb the cannabis glut and falling wholesale prices that growers are struggling with. You can read the report we worked on with Wells Fargo covering this phenomenon here.

As the Northeast grows and continues to add legitimate license holders, what happens to the oversupply in the West being shipped East? We will continue to follow these trends and keep you informed in future posts.

Cannabiz Media customers can stay up to date on these and other new licenses through our newsletter, notification and reporting modules. Subscribe to our newsletter to get these weekly reports in your inbox. Or you can schedule a demo to learn more about how to access the Cannabiz media license database yourself to dig deeper into this data.

About the author

Ed Keating is 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 on compliance issues. Ed has led product, marketing and sales while overseeing complex, multi-jurisdictional product lines in the securities, corporate, UCC, security, environmental and human resources markets.

At Cannabiz Media, Ed enjoys the challenge of working with regulators around the world as he and his team gather corporate, financial and licensing information to track the people, products and companies 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 licensing data platform. Check out Cannacurio’s posts and podcasts for the latest updates and information.