Key Takeaways: 

• The U.S. Northeast is emerging as a significant cannabis market — with evolving regulations and rising consumer demand creating a strong business environment. 

• Newer states to legalize adult use like Maryland, New Jersey, and New York are driving growth, generating billions in sales and positioning themselves as key markets for cannabis expansion. 

• Cannabis tax revenues are helping these states manage budgets, support social equity programs, and fuel economic development. 

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With mature cannabis markets in states like California, Colorado, and Oregon remaining competitive, many cannabis companies are shifting their focus to emerging markets for growth opportunities. The Northeast, in particular, is proving to be a hotbed of opportunity — with new and expanding cannabis programs driving both business growth and significant state revenue. 

Why the Northeast?  

While Massachusetts retains the crown for cannabis sales in the Northeast, states like Maryland, New Jersey, New York, and even medical-only Pennsylvania are emerging as major players. These states offer high consumer demand, evolving regulations, and revenue potential that make them attractive for businesses looking to expand. Here’s how these markets are shaping up and what they mean for your business. 

Maryland: Rapid Growth in Just One Year 

Maryland’s cannabis market took off quickly following adult-use legalization in July 2023. Within its first 12 months, total retail sales exceeded $1.1 billion — with adult-use sales alone accounting for over $700 million. Monthly sales have consistently surpassed $95 million, reflecting strong consumer demand. 

Maryland has used cannabis tax revenue to invest in social equity initiatives. Over $40 million in licensing fees has been directed to the Community Reinvestment and Repair Fund, supporting local jurisdictions and communities impacted by previous cannabis criminalization. And fiscal year tax revenues are expected to top $100 million. For cannabis operators, Maryland presents a dynamic market with significant revenue potential and strong state support. 

New Jersey: A Billion-Dollar Market (and Growing)  

New Jersey’s cannabis market is booming, surpassing $1 billion in combined medicinal and recreational cannabis sales in 2024 — a nearly 25% increase from the previous year’s total of $800 million. Since adult-use cannabis sales began in April 2022, the state has generated over $2 billion in total revenue.  

For the state, the tax revenue impact is substantial. New Jersey has collected over $62 million in cannabis tax revenue since 2022 — along with over $6 million in social equity excise fees that go toward education, economic development, and social services for communities disproportionately affected by cannabis prohibition. For cannabis companies, this signals a stable and profitable market with room for expansion. 

New York: A Complex Market with High Potential 

New York’s cannabis industry surpassed $1 billion in retail sales in 2024 as the state works to establish itself as a national leader. More than half of all licenses have been awarded to social and economic equity applicants, promoting opportunities for minority- and women-owned businesses. With over 275 licensed dispensaries and 500 supply-side licenses issued, the legal market continues to grow — though challenges remain. 

Despite strong consumer demand, New York’s cannabis rollout has been slow and the illicit market continues to thrive. Additionally, licensed medical marijuana organizations face a steep $5 million fee to enter the adult-use market, creating a significant barrier to expansion. While the state is taking steps to strengthen enforcement and improve market conditions, businesses must carefully navigate these regulatory hurdles to succeed. 

Pennsylvania: A Sleeping Giant  

Despite being a medical-only state, Pennsylvania ranks as the sixth-largest cannabis retail market in the U.S. Monthly medical cannabis sales eclipsed $140 million in October 2024, with total sales for the year estimated at $1.7 billion. Since 2020, the state has generated over $6.7 billion in cannabis sales.  

While Pennsylvania has not yet legalized adult-use cannabis, momentum is building. Governor Josh Shapiro has expressed support for legalization to help address the state’s budget deficit. However, with a divided legislature and the state not allowing citizen-initiated ballot measures, the path forward remains uncertain. Still, Pennsylvania’s large population and established medical market make it a prime candidate for future adult-use expansion — one that cannabis companies should watch closely. 

What This Means for Your Cannabis Business 

The Northeast presents lucrative opportunities for cannabis companies across the supply chain. Here’s why your business should take note: 

• Expanding markets: Maryland, New Jersey, and New York are demonstrating strong year-over-year growth, and Pennsylvania could be next in line for adult-use legalization. 

• Revenue potential: With billions in sales and rising tax revenues, these states offer fertile ground for cultivators, manufacturers, retailers, and ancillary businesses. 

• Regulatory evolution: States are refining their programs, creating clearer pathways for business entry and long-term sustainability. 

How MGO Can Help 

Navigating new and emerging markets requires strategic planning, regulatory compliance, and financial knowledge. Our dedicated Cannabis team provides tax planning, audit support, and consulting solutions tailored to the cannabis, hemp, and CBD companies. Whether you’re a cultivator, retailer, distributor, manufacturer, or ancillary business, we can help you make informed decisions to thrive in legal markets across the U.S.  

Looking to expand your cannabis business into new markets? Let’s talk.

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Alternative Paths to U.S. Exchanges

There are a variety of reasons companies would prefer to avoid a traditional IPO. For those entities we provide tailored solutions during the entire go-public process — or portions of it — including the pursuit of alternatives such as a Regulation A+ offering and reverse mergers. We help each client find the path that’s right for your unique needs.

Bridging Cultures

Our China practice has the language skills and cultural understanding to navigate market complexities. Call or contact us online to find out how we can help you.

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To help cannabis entrepreneurs and investors keep up with the fast pace of change in the cannabis industry we will be providing monthly summaries of the latest regulatory and legislative news to provide a snapshot of latest happenings while also highlighting matters of interest looking forward.

This month the focus is on prominent federal legislative activity (e.g. the SAFE Act and the STATES Act), state legalization measures (e.g. NJ, NY, IL, and others), and two bills in Colorado that have the potential to attract out-of-state investment to that market.

Changes in Federal Cannabis Legislation

With control of the House of Representatives being transferred to the Democratic party, several bills that have the potential to profoundly impact the cannabis landscape have advanced in Congress. For example, the last week of March saw the House Financial Services Committee move forward the Secure And Fair Enforcement (SAFE) Banking Act to a full House vote, reportedly “within weeks.” Following the momentum of the House bill, U.S. Sens. Jeff Merkley (D-OR) and Cory Gardner (R-CO) have introduced the companion bill in the Senate.

The latest SAFE iteration addresses the cannabis banking crisis and includes amendments that offer protection to insurance companies and other financial services companies.

The banking issue is long-standing and predates even the implementation of recreational cannabis in the U.S. The lack of straight forward access to fundamental banking services for the cannabis industry creates a multitude of challenges, most notably the operational and financial difficulties of a multi-billion-dollar industry operating almost entirely in cash. This has obvious implications for public safety and potential diversion to the black market, among other concerns.

The inability to access banking services is often identified as a major hindrance to market entry for large and well-resourced corporations and removal of this barrier could herald a seismic shift in investment into the cannabis industry. At time of writing the House Bill had 152 cosponsors, including 12 Republicans, whereas the Senate bill has 20 co-sponsors.

Adding further momentum to the SAFE bill, last week Secretary Steve Mnuchin offered his support for a legislative fix for the banking issues facing the cannabis industry. “There is not a Treasury solution to this. There is not a regulator solution to this,” he said. “If this is something that Congress wants to look at on a bipartisan basis, I’d encourage you to do this.”

Another potentially substantial piece of legislation is the Strengthening the Tenth Amendment Through Entrusting States Act (STATES Act), which aims to reduce conflict between federal and state laws as they relate to cannabis. The STATES Act is a potential gamechanger for the cannabis industry, allowing legal certainty for companies seeking to operate in dozens of jurisdictions across the U.S.

Although this legislation stalled in December, it was reintroduced on April 4, alongside other measures, which include:

• the Ending Federal Marijuana Prohibition Act that would effectively legalize marijuana at the federal level by removing it from the Controlled Substances Act.
• The Marijuana Justice Act of 2019

The extent to which these bills have bipartisan support may be crucial if they are move beyond the House.

Four Steps Forward and Two Steps Back in State Legalization Efforts

It has been a mixed month in terms of advancing cannabis legalization measures at the state level. On the one hand, there has been progress in multiple states, such as Connecticut, Illinois, and New Hampshire. While on the other hand there was a couple of snags holding up the implementation of recreational markets in New Jersey and New York.

Recent adult-use cannabis legalization headlines include:

• The New Jersey cannabis legalization bill was pulled due to lack of support although Gov. Murphey (D) reportedly stated he remained committed to getting the bill passed.
• New York dropped cannabis legalization from its budget bill where it was viewed as more likely to pass, however, regulators remain optimistic of progress later in the year. The New York City Council also voted to ban cannabis testing for job applicants.
• A General Law Committee in the Connecticut Legislature approved a bill that would legalize an adult-use cannabis market in the state.
• In New Hampshire, the House Ways and Means Committee approved a vote on the floor on legislation that would legalize an adult-use cannabis market.
• A bill to legalize retail cannabis in Illinois was introduced and passed to a subcommittee for further consideration.
• Governor of Guam signed a bill legalizing cannabis, becoming the first U.S. territory to do so.

Despite the hiccups outlined above, there is a clear trend towards legal cannabis across the U.S. Moreover, several states took steps towards expansion or liberalization of their medical cannabis markets. Certainly in the long term, the outlook is optimistic for the cannabis industry on a number of fronts.

Back to the Future: Colorado Looks to Position Itself as a Cannabis Investment Hub

When Colorado became the first state to implement an adult-us cannabis framework in 2014, out of state investment was restricted. This allowed the state to build upon its existing medical cannabis market.

The understandable caution has since been questioned, however, and a Bill offering more flexibility in investment passed both the Colorado House and Senate in 2018, only for then Gov. Hickenlooper to veto it. In 2019, a replacement Bill was introduced and has recently passed its third reading in the House unamended.

As an established market with mature regulations and market stability, Colorado has low-risk potential when compared to emerging markets in other states – although competition is likely to be strong, with ever-thinning margins as prices continue to drop in the state.

Out-of-state investors exploring options in Colorado may be interested in acquiring social consumption licenses in Denver, or seek opportunities for market expansion in the delivery segment of the market. If passed, HB19-1234 would allow licensed dispensaries to offer these services for the first time.

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