As the second quarter of 2025 begins, there is arguably no cannabis market in the United States that has a more compelling growth trajectory than New York. Though the initial rollout of adult use sales in New York was plagued by bureaucratic challenges and delayed by litigation, the New York market began to expand considerably in 2024, with its growth further accelerating in the first few months of 2025, and shows no signs of slowing today.
As its momentum builds, New York appears to finally be on the path to realizing its immense economic potential as a legal cannabis market, which at maturity could rival that of any state in the country. These unmistakable growth trends in New York are creating new business opportunities for a variety of cannabis market participants, including retailers, brands, distributors, and ancillary operators alike.
History
On March 31st 2021, New York passed the Marijuana Regulation & Taxation Act (MRTA), legalizing adult use cannabis in the state. When the MRTA passed, New York became the second-most populous state to legalize adult use cannabis, following California. Given the size of its population and its status as a center of global commerce, New York’s legalization was viewed as a watershed moment in the development of the cannabis industry in the United States, and across the world.
However, adult use cannabis sales in New York were delayed much longer than anticipated, with the first dispensaries not opening until December 2022. Moreover, over the course of the next year very few legal retailers were actually able to open in New York, due to real estate and licensing challenges. As of January 2024, nearly three years after the MRTA became law, there were still only 50 legal dispensaries open across the state – a far cry from the 2,000 dispensaries that the New York Cannabis Advisory Board (CAB) estimated was necessary to satisfy consumer demand.
As a result, the New York cannabis market continued to operate at a fraction of its potential, for longer than expected. In the first quarter of 2024, New York averaged $35 million in monthly cannabis sales, whereas New Mexico – a state with 10% of New York’s population – averaged nearly $50 million in monthly sales.
In this context, much of the initial excitement about the New York cannabis market began to wane. With capital in the industry scarce, many cannabis operators chose to focus instead on other states that seemed to present a more immediate business opportunity than New York.
Market Growth
However, in the second quarter of 2024 – as New York entered its fourth year of legal cannabis – the state’s legal market began to quietly turn a corner. In particular, the pace at which New York’s Office of Cannabis Management (OCM) began to license new dispensaries began to increase noticeably. By June 2024, there were more than 125 legal dispensaries open across the state, more than double the number open at the beginning of the year. There was commensurate growth in the state’s sales numbers over this period, reflecting the appetite that New Yorkers had for legal cannabis, if made conveniently available at retail. In June 2024, New York sold over $75 million in legal cannabis, more than double its sales from early 2024.
New dispensaries continued to open across the state throughout the second half of the year. By December 2024, there were more than 225 legal dispensaries open in New York. In the fourth quarter of 2024, the state averaged more than $100 million in monthly cannabis sales, triple its monthly sales from the first quarter of 2024.
This pace of retail expansion continued in early 2025. By March 2025, there were more than 335 dispensaries open across the state, with a typical week seeing 3-5 new retailers open, often across diverse regions of the state. Many of these new dispensaries opened in rural New York counties or urban neighborhoods with a limited number of legal retail cannabis outlets, helping drive new sales. In the first quarter of 2025, New York averaged more than $115 million in monthly sales. The New York market has thus grown nearly four times in size in the past year.
The increase in the number of dispensaries in New York is, in turn, creating more opportunity for cannabis brands. In 2023 and much of 2024, the shortage of dispensaries in New York created fierce competition for limited shelf space, disadvantaging new market entrants or brands with limited capital. However, the increasing number of dispensaries in New York has helped sustain a wider ecosystem of brands, with the Governor’s Office reporting in early 2025 there were more than 500 licensed cannabis brands operating in New York.
Enforcement
The growth in New York’s legal cannabis market has also been driven by increased enforcement against illicit cannabis operators, particularly in New York City.
In the initial years following the passage of the MRTA, the absence of legal retail cannabis outlets coupled with a lax attitude towards unlicensed cannabis operations led to a proliferation of illegal cannabis businesses across New York State. There were estimated to be more than 8,000 unlicensed cannabis storefronts in New York in early 2024, contributing to lower than expected legal cannabis sales.
However, in 2024 Governor Kathy Hochul, New York City Mayor Eric Adams and numerous local jurisdictions began to devote additional resources towards enforcing against unlicensed cannabis operations. In March 2025, Mayor Adams’ Office reported it had shut down more than 1,350 unlicensed operations across the city through its “Operation Padlock” program.
Moreover, in March 2025, federal judge J. Paul Oetken dismissed a lawsuit from unlicensed retailers challenging the legality of Operation Padlock. This outcome suggests that robust enforcement against illegal cannabis operations is likely to continue in New York. This should drive consumers to the legal cannabis market, and contribute to overall growth of the market.
Growth Trajectory
According to the OCM, by the end of 2025 there will be 550 or more dispensaries open in New York. There are also likely to be hundreds of new New York cannabis brands established throughout 2025. While these new market entrants will create additional competition, New York’s population size and large number of out-of-state visitors suggests there is substantial room for the state’s cannabis market to grow, and for new players to enter still.
In particular, it will take several years for New York to open the 2,000 legal dispensaries necessary to satisfy consumer demand across the state. As of April 2025, certain regions of the state – such as Long Island, with over 8 million residents – have fewer than a dozen dispensaries open, due to local municipal bans on legal cannabis sales. This represents the significant untapped opportunity that remains in the New York market.
Similarly, the New York market features a limited number of indoor flower brands, relative to other states, reflecting the initial emphasis the state placed on outdoor cultivation. As with the retail landscape, the New York brand landscape will expand substantially in the coming months and years, with the addition of new market entrants.
Given the significant expansion of the New York cannabis supply chain that is taking place, the OCM estimates that 2025 cannabis sales in New York will “exceed $1.5 billion”, likely putting it behind just the five largest cannabis markets in the country: California, Michigan, Florida, Illinois and Massachusetts. However, given the hundreds of new dispensaries that will open across the state throughout 2025, New York’s monthly sales by the end of the year seem poised to exceed $150 million, potentially putting it at nearly a $2 billion annual “run rate” by the end of the year.
In the years that follow, this growth seems likely to persist. By most estimates, New York has the potential to be a $5 billion cannabis market at maturity, if not even higher. New York is thus beginning to realize its potential as a legal cannabis market in 2025, creating exciting business opportunities for retailers, brands, distributors, and ancillary operators. There is arguably no cannabis market in the United States that has a more compelling growth trajectory in the coming years than New York.
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Article by Hirsh Jain, Director of Market Intelligence at Verdant.
Hirsh Jain, hirsh@anandastrategy.com, Ananda Strategy is a strategy consultancy serving leading cannabis brands, retailers, technology businesses and venture capital funds across the United States.
I am on the Board of Directors of the National Organization for the Reform of Marijuana Laws (NORML) in California, which for fifty years has been working to reform California’s cannabis laws, led the opposition to the War on Drugs in California, and co-sponsored California’s pioneering medical cannabis law, Prop 215, in 1996.
I am also on the Board of Directors of SC Labs, one of the largest cannabis and hemp testing labs in the United States. SC Labs provides potency, pesticide, terpene, and microbiological testing services to many of the leading cannabis and hemp operators in the country.
In addition, I am an Adjunct Law Professor at the University of Nevada, Las Vegas (UNLV) Law School, teaching courses as part of UNLV’s Cannabis Policy Institute.
