Hot States With Legal Cannabis for Adult Use

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States with legal cannabis for adult use are at the highest stage of legalization before the federal level. Upon full legalization, states can be categorized into three layers of adult use: up-and-coming, in-progress, and established.

Adult-use — our preferred term for recreational — cannabis speaks to an individual’s choice to make for themself, as an adult. And while adult-use cannabis is currently legal in 17 states and the District of Columbia, President Biden’s 2022 budget continues to uphold several bans on adult-use sales.

Higher Yields Consulting Hot States With Legal Cannabis for Adult Use

Read on to find out which states with legal cannabis for adult use are hot to enter in each of the three layers of full legalization.

Up & Coming States: New Jersey & New York

Up-and-coming states with legal cannabis, like New Jersey and New York, are fully legalized but have not yet begun adult-use sales. New Jersey has a slight lead over New York, as they’ve spent a lot of time on their social equity program and have already appointed their commission. 

Adult use in New Jersey was officially legalized on February 22, 2021, when Governor Phil Murphy signed three adult-use cannabis reform bills. As a result, New Jersey will have six license types

  1. Grower
  2. Processor
  3. Wholesaler
  4. Distributor
  5. Retailer
  6. Delivery service

So far, grower licenses are the only ones that have been capped in the entire state, at 37. It’s unclear whether the state will leave capping the other licenses up to the discretion of each municipality or the state will do so at a later date.

New York City, on the other hand, can thank its population of nearly 8.4 million (compared, for example, to the state of Colorado’s 5.7 million) for making it a hot state! Legalizing adult-use cannabis is a game changer for the East Coast since the region’s other adult-use states (Maine and Massachusetts) are much smaller.

In-Progress States: Massachusetts & California

An in-progress state has adult-use sales, but the state itself is still finding its footing in the industry. Massachusetts, for example, is hot because it’s still viable — the market is not oversaturated, has no cap on licenses, and isn’t volatile — due to the work of regulatory agencies.

In 2018, the state rolled out METRC inventory tracking in a very hands-on approach. Typically, states with legal cannabis leave things like METRC compliance and inventory tracking to the licensees to figure out on their own, but Massachusetts helped them every step of the way, even offering additional training and resources.

Higher Yields Consulting Hot States With Legal Cannabis for Adult Use

California, on the other hand, left its licensees floundering. Local jurisdictions have the power to make their own rules, creating disparities in operations across the state. The Emerald Triangle, for example, recently decided to ban cannabis altogether, forcing both medical and adult-use licensees to shut down after years of operating.

Despite its issues and thriving black market, California is an expensive market to enter (it’ll cost you roughly $6 million to open a dispensary). That said, it’s a great opportunity for someone who already has connections in their local municipality to make a lot of money, especially on the distribution and retail sides.

If you’re having trouble entering the California cannabis market, though, you might instead consider pivoting to Massachusetts, which has no residency requirement.

Established States: Colorado

Established states with legal cannabis have well-established regulations and operations. Take Colorado, for example. While it’s a fair and common assumption that Colorado is too saturated to enter, there are still pockets of opportunity available — if you know what you’re doing.

Denver is finally opening up a social equity program, with 72 licenses until 2024, which is a big deal as its licenses had been paused for a while. If you qualify for social equity in Denver, and have the experience and knowledge to set yourself apart from other licensees, now might be your chance to get into Colorado’s hottest market.

Experienced multi-state operators who have the capital and are looking to expand are great candidates, too, as long as they maintain the integrity of local mom-and-pop shops.

Other States With Legal Cannabis to Watch

The following states aren’t quite hot states with legal cannabis, but they are in the process of becoming fully legal and have the potential to become hotspots for cannabis businesses in the future.


Illinois is currently delayed in their legalization process. Their few operators were originally medical-only, which meant they got the first crack at early application approval for adult-use. 

Unfortunately, this process has turned into a monopoly where those few operators are making a ton of money, which in turn has skyrocketed prices, caused product shortages, and lowered quality. On top of that, litigation issues on later application rounds for adult use have brought the state’s legalization process to a standstill.

However, there is great promise for the future. With record-breaking sales in the first year, Illinois will be a state to watch once all of the litigation and licensing issues are resolved.

New Mexico

As the most recent state to legalize adult use, New Mexico is on its way to becoming a hot state for adult-use cannabis. Although we don’t know exactly what the future has in store here, New Mexico is certainly worth keeping an eye on for future developments.

Knowing what states with legal cannabis are most suitable to enter — and when — can be crucial for the success of your medical marijuana dispensary. Contact Higher Yields Cannabis Consulting to determine which state is the best fit for you and how you can get in with the strongest application.

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