Before legalization, the majority of cannabis consumed in the United States was grown on the West Coast and exported to the rest of the country. In the last two decades, medical and adult use legalization has spread nationwide despite continued federal Prohibition. As a result, every time a state changed its laws, it also had to establish its own regulated commercial market.
The results have been dramatic in almost every state:
Traditional West Coast markets like California and Oregon established markets without license caps, and legacy operators flooded in alongside big businesses.
These states have historically produced the nation’s cannabis supply, and as a result, produced 4–5 times what their own citizens consume. Legalization set the stage for a legal supply glut, tanking prices, and causing legal operators to shut down… and potentially start serving illegal interstate markets again.
Legalization has created new opportunities in some states, but these states are sensitive to conditions in neighboring states.
While most of the North Atlantic and New England states have legalized, customers can easily access different state markets due to their proximity, meaning some states in the region (like New Jersey) are emerging as clear winners, while others (like Connecticut) aren’t experiencing as strong growth. Michigan was an early winner in the Midwest, but Minnesota—surrounded by fully illegal states—is becoming a formidable market in its own right.
In medical-only states, there is a full spectrum of outcomes
For example, Oklahoma has become one of the freest markets in the South, and patients in Utah still largely obtain cannabis illegally from out-of-state.
Consumers in fully illegal states drive some of the largest sales in nearby legal states
For example, consumers in Idaho drive business in border towns in Oregon, Washington, and Montana.
On Tribal lands, business is steadily growing
Tribal operators have a distinct advantage because of their ability to establish regulations that compete with state schemes. As a result, Tribal businesses are growing. For example, federally recognized Tribes were the first to market in Minnesota, and are the only businesses in states where cannabis is either fully illegal or over-regulated, like North Carolina and Nebraska.
A few countries have opened up their imports and exports, but so far, the US hasn’t entered that market. With the move to Schedule III, interstate and international markets are about to be a (limited) reality for US operators. How will this impact business owners and consumers?
Join the Oaksterdam Legal Department for Schedule III: Interstate and International Commerce with Hirsh Jain of Ananda Strategy, part of our ongoing series of workshops examining the move to Schedule III.
Hirsh Jain is the Founder of Ananda Strategy, which advises leading cannabis brands, retailers, ancillary technology businesses, and venture capital funds in the United States. Ananda works with many of California’s leading cannabis operators, helping lead their expansion strategy, competitive licensing efforts, and M&A activity within California.
Hirsh serves as Vice Chair of the California Cannabis Chamber of Commerce, which aims to promote the common interests of cannabis businesses in Los Angeles County by advocating for sound public policy and facilitating collaborations between cannabis operators. Hirsh is also on the Board of Directors of the National Organization for the Reform of Marijuana Laws (NORML) in California, which for fifty years has been working to reform California’s cannabis laws, led the opposition to the War on Drugs in California, and co-sponsored the nation’s first medical cannabis law, Prop 215, in 1996. He teaches Economics and other courses in the Business Department at Oaksterdam University.
September 17, 2026 – 9 am Pacific / Noon Eastern