Whitney Economics Forecasts Legal Cannabis Market Growth in 2026 Amid Challenges for Small Operators
Whitney Economics projects U.S. legal cannabis sales will rise to $30.5 billion in 2026, but warns that falling prices and tougher market conditions could threaten small operators despite overall growth
Key Points
- 1Whitney Economics forecasts U.S. legal cannabis sales to reach $30.5 billion in 2026, up 4.9% from 2025
- 2The firm predicts 24 states will see cannabis revenue declines in 2025, compared to 15 with gains
- 3Price compression is now a major market force, impacting both operators and tax revenue forecasts
- 4Consumer spending has become more selective and price-conscious as the market matures
- 5Whitney suggests states may need to consider broader retail distribution models to sustain legal market growth
Legal cannabis sales in the United States are expected to rebound in 2026, according to a new forecast by Whitney Economics. After projecting the first-ever year-over-year decline in legal market history for 2025, the firm estimates the market will climb from $29.1 billion in 2025 to $30.5 billion in 2026, marking a 4.9% increase. Despite this projected growth, the landscape is becoming more complex for both consumers and small businesses as the market matures
Beau Whitney, chief economist at Whitney Economics, cautions that the era of explosive, forgiving growth in the cannabis sector is over. "Cannabis is entering a more mature, less forgiving phase, one where price compression is no longer a side effect of growth but one of the forces defining the market itself," Whitney explained. The firm had to adjust its forecasting methods as price drops became too influential to ignore, and accuracy for 2025 projections slipped to 85%
The data suggests a widening gap between states and operators. By 2025, Whitney Economics expects 24 states to report declining cannabis revenue, while only 15 will see gains. Newer markets like New York and Ohio may help soften the overall dip, but they are not enough to offset broader weaknesses. For small businesses, this environment could mean increased pressure and shrinking margins, even as total market revenues rise
Consumer behavior has shifted as well, with buyers now acting more selectively and price-consciously, reflecting trends seen in other mature product categories. Whitney noted that spending patterns have changed significantly since the COVID-19 era, making it harder for operators who built their businesses on earlier, more robust demand. Lawmakers are also being warned that falling prices could erode tax revenues, and that relying solely on dispensary-only models may not be sustainable. Whitney even suggested that expanding legal cannabis sales into grocery and big-box retail could be necessary for market health
From the OG Lab perspective, this forecast signals a turning point for the U.S. cannabis industry. While market growth is set to resume, the environment is increasingly tough for independent operators and local brands. Industry stakeholders should watch closely as economic pressures, regulatory changes, and evolving consumer behaviors reshape the competitive landscape. The survival of small operators—and the diversity of the legal market—may depend on how states and businesses adapt in the coming years