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. Jain’s breadth of experience – from guiding dispensary rollouts in California to advising multi-state expansion efforts – 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 California’s 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 “cannabis desert” with no local stores despite voter support. Jain’s advocacy and consulting in such markets aim to chip away at these local bans, helping unlock significant pent-up consumer demand. He’s 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 – one of the nation’s largest cannabis testing labs – 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 “Michigan Factor”: Recent tax increases in Michigan may reduce the “cross-border” 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 “tenths”)
3. Minnesota: A Slower Burn
Previously ranked higher, Minnesota’s 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 “bare shelves” until the second half of the year.
4. Virginia: The Deep South Pioneer
Virginia is a “super exciting” 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 Jersey’s 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 “retail saturation” in major cities are preventing meaningful expansion.
2026 “Adult-Use Flip” Probabilities
Jain also provided odds for four key states attempting to legalize adult use in 2026:
Pennsylvania (40%): Faces a “majority of the majority” 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 “cannabis deserts” opening up to retail.
Full Transcript
[to be uploaded]