“The central question is no longer whether cannabis will become a major American industry, but what kind of industry it will become.”
By Damian Fagon, Parabola Center for Law & Policy
For more than a decade, U.S. cannabis legalization has been framed as an opportunity for small producers, local brands and craft cultivation. In most adult-use states, that promise has not been realized.
Licensing data may suggest broad participation, but small-scale cannabis producers that survive beyond initial launch remain rare. What is commonly described as “craft cannabis” functions far more as a marketing label than as a stable economic segment.
This outcome is often attributed to market forces. Consolidation is treated as inevitable, scale as efficient and the exit of small operators as a natural feature of competition. That explanation falls short. The erosion of small cannabis producers reflects policy design choices, particularly the way competitive pressure has been introduced.
Across legal markets, states have required licensed producers to absorb full compliance costs and face wholesale price competition from the outset, well before small operators have had the opportunity to achieve basic operating stability. Firms pushed immediately into price competition while carrying high fixed regulatory costs and limited access to
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