It was never going to be all sunshine and legal gummies. But few imagined it would unravel this fast.
Just five years ago, cannabis legalization seemed like the fastest-growing industry in North America. Between 2018 and 2021, investors poured billions into grow ops, dispensary chains, and weed-tech startups. Everyone from venture capitalists to celebrities wanted a piece of the green rush. Politicians competed to out-progressive each other on cannabis reform. Analysts called it “the next tech boom.” Companies were labeled “the Apple” or “the Amazon” of cannabis. And for a moment, it felt like they were.
Fast forward to 2025: the landscape has shifted as the hype wore off.
What comes next is something stranger, a kind of capitalist hangover.
The dawn of a post-rush cannabis economy feels more like a cautionary tale.
Cracks in the Empire
Joseph Schumpeter, part of that legendary group of early 20th-century economists, dedicated his work to unraveling the dynamics of business cycles. He saw these cycles as a process of emergence, consolidation, and eventual decline. New technologies allowed businesses to emerge and trigger chains of innovation. Schumpeter recognized that promising new products and nascent economies often carried the seeds of their own impermanence, destined to evolve or fade as markets shifted. In cannabis, though, consolidation and decay came surprisingly fast.
Take Tilray, once the darling of Canada’s legalization story. The company’s 2018 IPO was historic: the first cannabis stock to trade on NASDAQ. Its valuation ballooned to over eleven figures at its peak. Today, it is worth a fraction of that, below the $1 billion mark. Imagine the losses. CEOs tend to act as though they do not care, as if the physical business were detached from the speculative financial sphere. But those depreciations have real consequences. Then they make deep cuts to operations to satisfy the board of directors, just like Canopy Growth did, shedding hundreds of employees and shuttering facilities in 2023 and 2024. Layoffs and cuts tend to please investors.
In the U.S., the dramatic fall of MedMen got a lot of attention. Less was written about StateHouse Holdings, Slang Worldwide, Schwazze, and other companies that either collapsed or fell under heavy financial pressure. There is a trick to it in cannabis. Because the industry is still federally illegal, cannabis companies cannot file for bankruptcy protection, meaning they cannot legally go bankrupt. As with those mentioned, many others have spiraled into debt or restructured under creditor pressure.
And of course, something similar happened to the legendary magazine I currently have the pleasure of writing for, when under previous leadership, it failed in its attempt to rebrand itself into something like a dispensary chain.
This period saw numerous companies reduce operations, file for creditor protection, declare insolvency, or collapse entirely. Even firms aiming to produce cannabis in Colombia had to abandon their infrastructure after just a few years.
It was not just one factor. It was clearly a combination: too much hype, not enough market. Something linking the wild volatility of crypto markets to cannabis might have affected how stocks behaved in those early days, a search for big, short-term profits driven by the promise of massive growth. Add to that the fact that cannabis companies are limited in how they can be traded on major exchanges, with relatively low market capitalization and liquidity. That adds volatility.
Eventually, though, what really killed the mood in the market was the long-promised but still unrealized prospect of a legal federal market in the U.S.
A Market Oversaturated, Overtaxed, and Over It
Legal cannabis was supposed to kill the illicit trade, create a job boom, and flood state coffers with tax revenue. But in most states and provinces, the legal market is oversaturated, overtaxed, and structurally inefficient. Supply routinely outpaces demand. Growers in Oregon and Michigan have reported wholesale flower prices collapsing below $500 per pound.
In California, excess product has led to crop dumping, with producers destroying inventory rather than paying taxes on it. The current administration under pro-cannabis, Democratic Governor Gavin Newsom has prohibited all sorts of legalization spinoffs (like synthetic-derived hemp products), heavily seizing illicit cannabis in an attempt to revive what is left of a struggling legal cannabis market. And despite billions in legal sales, the unregulated market still outpaces the licensed sector in both scale and accessibility.
The cannabis economy was built like a startup ecosystem, fast, bloated, and overly financialized. Multistate operators borrowed heavily to build vertical empires. Many issued junk bonds and convertible debt, backed by promises of imminent federal legalization. But when reform stalled in Congress and retail revenue failed to meet forecasts, the debt came due.
Some companies were operating under projections that national legalization would arrive by 2022. Instead, they are stuck navigating fragmented state markets, burning cash with no ability to scale efficiently. And even where legalization happened, like New York or New Jersey, bureaucratic rollouts and local moratoriums stalled store openings, leaving producers with no sales channels.
According to market analysts, only 27% of cannabis companies turned a profit last year.
Welcome to the Post-Legalization Epoch
So what now? It might be a little speculative, but we may be entering the “post-rush epoch” of cannabis. A time when the fantasy of easy profits gives way to the reality of institutional fatigue, market correction, and regulatory reckoning.
This is not the golden age. It is the moment where things either consolidate into a handful of corporate giants or break open into something more decentralized, leaner, and sustainable. I bet some of those large companies I mentioned are betting on the former.
That future is not written yet. But there are signs of a shift. Hybrid business models that blend cannabis with hospitality, education, or culture are gaining ground. Some states are testing cooperative structures and craft certifications that could give small producers a competitive edge.
A Moment of Reckoning
Despite all this, the cannabis market seems to be regaining a degree of stability. The crashes have helped many reimagine a healthier approach to the cannabis business. Wall Street Wannabe’s enthusiasm has cooled, leaving space for culture-based and more grounded models. Smaller, leaner, community-rooted cannabis businesses are doing better.
Even some big companies that overshot in the early days have been cleaning up their balance sheets.
Cannabis is now legal for more than 50% of adult Americans. Paradoxically, the economic infrastructure around it remains shaky. But this is not a story of failure. It is a story of growing pains, of an industry scaled at tech-boom speed, without the stability of (sometimes) good old agricultural economics.
Maybe it was inevitable. The plant was asked to carry too many dreams at once: social justice, state revenue, job creation, corporate profits, rural development, and vibes. Now that the wave has crested, what is left is a quieter, more honest task: rebuilding cannabis as an agricultural product, a cultural good, and a regulated industry. Far from a miracle, but still something worth preserving.
There is no rush anymore. And maybe, that is exactly what the cannabis culture needs.
