State of Play:
What Cannabis Operators Need to Know Now
Regulations shift. Taxes jump. New markets open while old ones buckle under red tape. For cannabis operators, change isn’t the exception—it’s the environment.
Whether you’re scaling up, holding your ground, or weathering policy whiplash, staying ahead takes more than hustle.
It takes capital, timing, and a clear-eyed view of what’s really happening on the ground.
Governor Abbott just vetoed SB 3, which would’ve banned all consumable hemp products containing THC (yes, including delta-8 gummies and seltzers). Instead, he’s called for a special session to craft a more coherent regulatory framework. It’s a temporary win for hemp operators—but also a warning shot. The rules are changing. Again.
Medical cannabis saw modest expansion in the same breath, with new qualifying conditions and more patient-care facilities approved. That’s triggering a rush to build out infrastructure—from dispensaries to delivery fleets. Smart operators are lining up flexible capital now to stay nimble through whatever rules come out of the next legislative round.
Q1 legal-market sales dropped 11% year-over-year. Illicit operators still own 60%+ of the market. And even though the legislature hit pause on a planned 25% excise tax hike, many licensed businesses are hanging on by a thread.
Cultivators and distributors are reallocating capital toward differentiation—organic certs, greener packaging, DTC platforms—and trying to squeeze every dollar of value out of increasingly thin margins. With pesticide rules tightening and lab costs rising, timing cash flow around compliance has never mattered more.
It’s been four years since medical cannabis was legalized, and the program still isn’t live. Political infighting has stalled nearly every effort to get operators licensed and product to patients.
Still, interest is high—and federal rescheduling could be the break Alabama needs. Operators prepping for launch are already exploring non-bank capital to fund greenhouses, labs, and education campaigns. When change finally hits, those who moved early will be ready. Everyone else will be scrambling.
Adult-use tax revenues hit $17.5 million in Q1—up 10% over last quarter. Growth is steady, but payment structures are clunky. Operators pay taxes quarterly, but expenses hit weekly.
To smooth the mismatch, many are converting tax credits into immediate working capital—then reinvesting in cultivation rooms, digital menus, and marketing programs that drive volume. The goal? Keep momentum up without draining reserves.
License count dipped 3% in Q1. Enforcement sweeps thinned out weaker operators, but year-over-year growth still sits at 17%. Consolidation is the name of the game.
Buyers are using projection-based financing tied to combined revenue streams to acquire distressed assets, fund renovations, and position themselves before the next license push. Done right, the math works—and the timing couldn’t be better.
Retail licenses are finally rolling out. New operators are spending $500K–$1M per store on buildouts, security, POS systems, and initial inventory. And they’re doing it with limited local supply.
To manage the crunch, operators are using milestone-based financing—draws for construction, then for inventory—followed by repayment off first sales. That keeps stores on schedule and capital flowing when it counts most.
License volume spiked 27% in Q1. That’s 644 new operators crowding a market that wasn’t quite ready.
Legacy producers are racing to upgrade equipment and lower costs: think efficient irrigation, solar retrofits, automated trimming. Financing that scales with first sales lets them make these investments now—without waiting on bank timelines that don’t match market urgency.
Regulators shut down dozens of unlicensed shops in June. Legal dispensaries are suddenly seeing more foot traffic than they can handle—but many aren’t equipped for the surge.
Inventory financing and short-term working capital are helping them restock, staff up, and solve cash logistics before that demand cools off. Operators that move quickly will convert new customers into loyal ones.
The state hasn’t accepted new cannabis license applications since late 2023. That pause will likely last until at least the end of this year.
For the ~170 active dispensaries, it’s a rare window to level up without new competition. Operators are investing in store upgrades, customer retention, and tech that improves margins. The ones who use this quiet stretch wisely won’t just survive the next licensing round—they’ll dominate it.
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