The cannabis industry is currently undergoing rapid change, marked by new regulations, shifting consumer behavior, and notable market developments over the past 48 hours. In California, a recent announcement confirmed that the state’s cannabis excise tax rate will increase from 15 percent to 19 percent on July 1. This increase marks the highest state cannabis tax in the United States and is mandated by a 2022 law triggered by declining tax revenues. Businesses and trade groups warn that higher taxes could prompt more consumers to turn to the illicit market, potentially driving more licensed businesses to close. California legislators are reacting, with the Assembly Revenue and Taxation Committee unanimously advancing a bill to halt this tax hike, highlighting the urgency and pushback from industry leaders and lawmakers alike.

Meanwhile, Washington D.C. is intensifying its crackdown on illegal cannabis shops. In the past six months, 34 unlawful businesses were closed, and 24 more ceased operations after warnings. This clampdown is expected to benefit compliant dispensaries and could help legal sales recover to the 2023 level of 38 million dollars. With stricter enforcement, authorities predict approximately 40 regulated retail shops will be open by the end of 2025. However, the market remains tense, as recent federal scrutiny around dispensary proximity to schools has raised compliance questions and prompted warnings from federal officials.

In Colorado, the legal cannabis industry continues its growth trajectory. The market was valued at 2.59 billion dollars in 2024 and is projected to more than double to 5.53 billion dollars by 2030, indicating robust consumer demand and strong market fundamentals despite national headwinds. New business loan programs are being introduced to support expansion and acquisitions, as established players seek competitive advantages through consolidation and innovation.

Overall, consumer behavior reflects a growing price sensitivity due to higher taxes and product costs, driving some demand back to the illicit market, especially in major states like California. Leaders are responding with advocacy, lobbying for regulatory relief, and exploring new financial strategies to weather challenging conditions. Compared to previous quarters, today’s landscape is characterized by rising regulatory and compliance pressures, but also opportunity for growth in more stable, well-regulated regions.