đ Top 5 Cannabis Growth States in 2026
We catch up with Cannabis policy and market strategy expert Hirsh Jain to talk through his Top 5 Growth Markets and Why.
Introduction
Hirsh Jain is the founder of Ananda Strategy (@anandastrategy), a Los Angeles-based cannabis consulting firm, and a leading expert on cannabis policy and market strategy. In a recent interview (January 9, 2026), Jain shared his outlook for the cannabis sector in 2026. He discussed his work helping companies expand into new markets, offered analysis on his ranking of growth states poised for major growth, and addressed the regulatory and policy dynamics shaping the industry. Jainâs breadth of experience â from guiding dispensary rollouts in California to advising multi-state expansion efforts â gives him a unique perspective on where the U.S. cannabis market is heading.
He previously appeared on the Highly Objective podcast two years ago and I thought it made sense to have him back to kick off our new approach in 2026 of publishing summaries of conversations while making the whole transcript available, but removing the pressures of a podcast.
Background
Retail Expansion in California: Jain has been heavily involved in opening up new retail opportunities in Californiaâs underserved areas. For example, he worked on efforts in Redwood City, which after years of local hesitation finally welcomed its first dispensaries. Redwood City had long been a âcannabis desertâ with no local stores despite voter support. Jainâs advocacy and consulting in such markets aim to chip away at these local bans, helping unlock significant pent-up consumer demand. Heâs also been involved with recent efforts to help a client win a retail license and open up in Oceanside and Redondo Beach.
New Market Entries (Minnesota and Others): Beyond California, Jain has been assisting clients with plans to enter newly legalized states. He has been active in New York, helping LEVEL on its expansion into New York. He also keeps close watch on other emerging markets so that his clients can hit the ground running as new states come online.
Industry Leadership Roles: Complementing his consulting, Jain holds key advisory positions in the industry. He joined the board of SC Labs â one of the nationâs largest cannabis testing labs â in 2022, where he contributes to strategy for ensuring product quality and safety standards across different state markets. Jain also serves on the board of California NORML (National Organization for the Reform of Marijuana Laws), underscoring his commitment to sensible regulations and policy reform.
2026 Cannabis Growth States
In a recent Q&A, Hirsh Jain, founder of Ananda Strategy, shared his rankings for the top growth states in 2026. The discussion centered on the dollar value these states are expected to add to the total U.S. market, which stood at approximately $32 billion in 2025.
1. New York: The Most Compelling Trajectory
New York is ranked as the #1 growth state for 2026, despite a slow start following the 2021 legalization.
Sales Growth: Jumped from $100M in 2023 to $900M in 2024, reaching approximately $1.8B in 2025.
2026 Outlook: Total sales could reach $2.5B if the current pace of four to five new store openings per week continues.
Retail Expansion: The state began 2026 with roughly 550 dispensaries and is projected to end the year with nearly 800.
Key Challenges: Declining revenue per store ($5M in late 2024 vs. $3.8M in late 2025) and ongoing issues with illicit market enforcement.
2. Ohio: High Potential with Regional Shifts
Ohio holds the second-greatest potential to add to legal sales in 2026.
Performance: The market hit a $1.2B annual run rate in December 2025.
2026 Projections: Best-case scenario of $1.5B in sales, driven by an expected increase from 190 to 250 stores.
The âMichigan Factorâ: Recent tax increases in Michigan may reduce the âcross-borderâ siphoning of Ohio customers.
Product Evolution: 2026 will see the full expansion of form factors, including pre-rolls (introduced late 2025) and the debut of standard eighths (replacing âtenthsâ)
3. Minnesota: A Slower Burn
Previously ranked higher, Minnesotaâs growth may be delayed until 2027.
Bottlenecks: Only ~45 dispensaries are currently open (13 tribal-owned), hampered by a licensing backlog and lack of cultivation supply.
2026 Outlook: Sales are estimated between $400M and $500M as the market struggles with âbare shelvesâ until the second half of the year.
4. Virginia: The Deep South Pioneer
Virginia is a âsuper excitingâ market, but its 2026 impact will be limited by a late start.
Timeline: Adult-use sales are currently slated for a November 1, 2026 launch.
Strategic Value: It will be the first adult-use state in the South, bordering four prohibition states with a combined population of 25M.
Asset Value: Recent deals, such as the $160M valuation of Virginia assets by Mill Street Capital, underscore the high stakes for operators.
5. New Jersey: Reaching a Plateau
New Jerseyâs growth is expected to taper off in 2026.
Market Size: Currently a ~$1.3B market, but sales have stabilized at roughly $325M per quarter.
Stagnation Factors: High pricing, illicit market competition, and âretail saturationâ in major cities are preventing meaningful expansion.
2026 âAdult-Use Flipâ Probabilities
Jain also provided odds for four key states attempting to legalize adult use in 2026:
Pennsylvania (40%): Faces a âmajority of the majorityâ hurdle in the Republican-controlled Senate.
Florida (40%): Success hinges on a critical Supreme Court review and signature verification.
Hawaii & New Hampshire: Popular with voters, but stalled by specific political power brokers. Both may require ballot measures to bypass legislative deadlocks.
The California Status
While the California market has shrunk by 30% from its $6B peak to approximately $4B, Jain expects it to remain flat rather than decline further in 2026. Meaningful growth is unlikely without major tax reductions and local âcannabis desertsâ opening up to retail.
Full Transcript
Dai Truong: Letâs start with some of the work you did in 2025 and your plans for this year. And, like we did last time, letâs dive into which states you think have the potential for the most growth and how you rank them.
Hirsh Jain: Thanks, Dai. Itâs great to be back. I really enjoy working with operators across the supply chain in many different states.
To give you some examples, Iâve been helping operators with retail expansion in Californiaâspecifically submitting applications in Oceanside and Redondo Beach, which I think will be some of the more valuable licenses in the state. Iâm also working with experienced California retail operators to help new licensees enter the Minnesota market and develop effective businesses there.
On the brand side, I work closely with LEVEL, helping them move into new states like New York, navigate the shifting Ohio landscape, and evaluate Pennsylvaniaâs potential adult-use transition. I also continue to serve on the board of SC Labs, which has expanded from one state to five and became the official testing partner of the California State Fair. Finally, I work with ancillary businesses like Verdant Strategies, helping them understand how evolving state dynamicsâlike Michiganâs tax changesâimpact their clients.
Dai Truong: Help me understand your approach. You wear a lot of different hats. Is it about staying on top of policy across every state to assess companiesâ needs and connect the dots?
Hirsh Jain: Thatâs exactly it. The first component is paying close attention to evolving state and local regulations. Being a âlegal nerdâ by origin, I find that deep competency in this area is incredibly useful to clients who donât have the time to track every shift.
The second piece is intellectual agility. Iâm a lawyer by trade and formerly worked in tech strategy at Airbnb. While I may not have the deep manufacturing expertise of someone like Chris Emerson (CEO of LEVEL), I have enough knowledge and policy insight to have intelligent conversations about scaling a brand or navigating regulatory obstacles. It keeps me nimble, and I learn a lot by osmosis from the talented people I work with.
Dai Truong: Youâre essentially spotting the blind spots they canât see day-to-day.
Hirsh Jain: Absolutely. For example, I recently served as an expert witness in the biggest administrative law case in Floridaâs history regarding their recent round of licensing. A little knowledge about state policy opened the door to participate in a major industry event.
Dai Truong: Letâs jump into the growth states. Do you view these as tiers or a ranked list?
Hirsh Jain: I think there are five key growth states to watch in 2026. In order of importanceâdefined by the dollar value they will add to the total market this yearâthey are: New York, Ohio, Minnesota, Virginia, and New Jersey.
This conversation is critical because the U.S. cannabis industry has seen minimal growth over the past few years. For federal rescheduling to mean anything, the industry needs to resume its growth trajectory.
Dai Truong: Letâs start with New York. Why is it number one?
Hirsh Jain: We are approaching the five-year anniversary of New Yorkâs legalization (MRTA passed in March 2021). For a long time, the market underperformed. In 2023, New York generated only $100 million in sales because there were only about 50 dispensaries open.
However, 2024 was a turning point. Sales jumped to $900 million, and by 2025, they reached approximately $1.8 billion. Thatâs nearly a 20x increase in two years. The reason is simple: retail expansion. We went from 50 stores in early 2024 to about 550 stores by the start of 2026.
I expect this retail growth to continue. By the end of 2026, we could see close to 800 stores open. If that happens, total sales could reach $2.5 billion.
Dai Truong: I agree with the math based on store count. But do you foresee challenges in actually getting those doors open? In California, we saw license holders unable to open due to lack of capital.
Hirsh Jain: Itâs a valid concern. There are thousands of operators in the New York queue, and inevitably, some will not open or will open under financial distress. However, New York differs from California in two ways.
First, New York has taken a stronger stance against local control bans, so retailers are more evenly distributed across the state rather than being concentrated in a few cities. Second, the tax environment, while not perfect, is less onerous than Californiaâs.
That said, retail performance per store has started to declineâdropping from a $5 million annual run rate to $3.8 million recently. We are also seeing supply chain stress, where retailers are struggling to pay distributors. Operators need to be very careful about who they partner with to avoid the kind of collapse we saw with HERBL in California.
Dai Truong: Letâs move to your second growth market: Ohio.
Hirsh Jain: Ohio has the second-greatest potential to add sales in 2026. We are about 18 months into adult-use sales. In 2025, Ohio did about $1.1 billion. For a state with double the population of Missouri (a $1.5B market), Ohio has room to run toward a $3 billion potential.
Growth has been driven by new store openingsâfrom 125 doors in early 2025 to over 190 now. I expect weâll reach 250 stores by the end of 2026. Additionally, neighboring Michigan recently increased taxes, which may stem the flow of Ohio consumers crossing the border for cheaper product.
Weâre also seeing an expansion of form factors. Pre-rolls only hit the market in late 2025, and weâre hoping to see âeighthsâ sold soon (replacing the unpopular âtenthsâ unit). If the state effectively manages the proliferation of intoxicating hemp, the legal market could hit $1.5 billion this year.
Dai Truong: Next up is Minnesota. You mentioned you would have ranked this higher six months ago. What changed?
Hirsh Jain: Minnesota has been slow to launch. We are approaching the three-year anniversary of the law passing, yet there are only about 45 dispensaries openâ13 of which are tribal. The market is bottlenecked on both retail and cultivation.
Cultivation takes time to stand up, and right now, the few stores that are open often have bare shelves. I donât see meaningful supply or retail density picking up until 2027. So, while it will grow off a low base, it wonât be the major contributor we hoped for in 2026.
Dai Truong: That aligns with my observation. Letâs talk about Virginia.
Hirsh Jain: Virginia is exciting, but Iâve ranked it fourth because the adult-use market likely wonât open until Q4 of 2026.
The state is poised to pass an adult-use bill this session (by March 2026), with implementation likely in November. Virginia is a âsleeping giantââa state of 9 million people bordering four prohibition states (NC, TN, KY, WV). It would be the first adult-use market in the South.
Incumbent MSOs are well-positioned here, similar to Florida, with capacity ready to transition. We recently saw a transaction valuing a Virginia license at $160 million, which proves the marketâs perceived value. But for 2026 specifically, the sales impact will be limited to the very end of the year.
Dai Truong: Finally, New Jersey.
Hirsh Jain: New Jersey rounds out the list, but its growth has largely tapped out. Itâs a $1.3 billion market, but quarterly growth has flattened.
While the store count increased by 30% last year, sales only grew 5-10%, suggesting new stores are just cannibalizing existing ones. The market suffers from high prices, poor quality perception, and a rampant illicit and hemp market. Unless the state gets serious about enforcement and opening up more municipalities, I donât see significant growth here in 2026.
Dai Truong: Briefly, where does California fit into this?
Hirsh Jain: California has declined from its peak of nearly $6 billion to about $4 billion. I donât think it can decline much further, but I also donât see it growing meaningfully without tax reduction and more local retail access. We are stuck in a vicious cycle where high taxes make businesses unprofitable, leading cities to ban them to avoid the headache.
Dai Truong: Lastly, what are the odds of new states legalizing adult-use in 2026?
Hirsh Jain: There are four possibilities: Pennsylvania, Florida, Hawaii, and New Hampshire.
I think Pennsylvania and Florida are the most likely, but Iâd still only give them about a 40% chance.
Pennsylvania: We have a supportive Governor and House, but the Republican Senate Majority Leader, Joe Pittman, requires a âmajority of the majorityâ to bring a bill to a vote. That is a high bar.
Florida: We are waiting on a Supreme Court review. Governor DeSantis may appoint a hostile justice, and the midterm electorate is tough.
Hawaii and New Hampshire face similar hurdles with specific power brokers standing in the way. I hope to be surprised, as a win in PA or FL would be a massive boon for the industry.
Dai Truong: Thanks, Hirsh. This was a great overview.
Hirsh Jain: Thanks, Dai. Always a pleasure.
The regional variation in market developement is striking. New York's trajectory from $100M to potentially $2.5B shows what happens when licensing bottlenecks clear up. I worked with retail expansion in similiar contexts and the revenue-per-store decline is a real concern. The Michigan tax increase buffering Ohio's market is textbook adjacent-state policy competition.