Can Michigan Dethrone California as North America's Cannabis Leader?

Introduction

California and Michigan are two of the most important markets in U.S. cannabis, but their stories are quickly diverging, even as their monthly total sales appear on the verge of converging. Could a state with just a quarter of California’s population soon surpass it as the nation’s largest cannabis market by monthly sales?

How did we get here, and what might this potential changing of the guard mean for the future of the industry?

Convergence

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California’s cannabis industry struggles have been well documented in recent years—just as Michigan’s market has experienced a remarkable boom. Yet it may still come as a surprise to many that Michigan is now on the verge of surpassing California in total monthly cannabis sales.

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California and Michigan have long stood among the largest cannabis markets in North America, posting impressive June sales totals of $299 million and $266 million, respectively. These figures place them in a league of their own.

To put Michigan’s performance into perspective: its June total was 64% higher than Illinois, which has 12.6 million residents and nearly double Ontario’s (~$135M USD), despite Ontario having a population of 15.3 million.‍

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What is so shocking about Michigan keeping pace with California sales and outright blowing past large markets like Ontario and Illinois is the difference in population. With a moderately sized population of 10.1M, Michigan is at the point of usurping America's largest state, California, which has a population of nearly 40M.

When evaluating sales per capita, the Michigan market is doing massive numbers with a sales per capita of $26.39 as of June 2025—the highest by far, some would say anomalous — meanwhile California's is one of the lowest in the country, a symptom of their large population.

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How can a state with just over 10 million residents sustain such a large cannabis market? Are Michiganders truly consuming more cannabis than any other domestic population?

The answer may lie in the geography of a fragmented U.S. cannabis landscape.

California, for example, launched the country’s earliest medical cannabis program in the 1990s and now has a fully mature recreational market. But it also exists within a region surrounded by other long-established adult-use markets, including Colorado, Washington, and Oregon. In contrast, Michigan has operated in a very different legal environment.

Cannabis legalization across the Midwest has progressed more slowly. While a growing number of states have adopted medical or even recreational programs in recent years, many including Ohio, Missouri, and Minnesota—have only begun recreational sales within the last few years. Until recently, Illinois and Michigan were the only two adult-use markets in the region.

This context suggests that Michigan has served as a primary source of legal cannabis for much of the Midwest. That theory is further supported by emerging data from Missouri, which launched its recreational program in early 2023 and now ranks second only to Michigan in per capita cannabis sales. Missouri borders eight states, but only one of them currently offers recreational access—making Missouri, like Michigan before it, a regional hub in an otherwise underdeveloped legal landscape.‍

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Michigan has had another advantage up its sleeve in recent years: cheap product. The state consistently boasts the lowest cannabis prices in the country, and by far the most affordable in the Midwest.

While Illinois launched its recreational market around the same time as Michigan, it faced significant challenges such as limited access and high prices hampering early growth. In contrast, Michigan adopted a more open and accessible regulatory approach, which allowed for a large number of retailers to enter the market. The resulting competition drove prices down, making cannabis more accessible and attractive not only to Michigan residents but also to consumers from neighboring states including Illinoisans crossing the border in search of better deals.

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California Outlook

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Michigan may be posting all-star sales figures, but the flip side of the story is California’s ongoing struggles. Once home to one of the largest standalone cannabis markets in the world, California has seen its market contract significantly since 2021. The COVID-19 pandemic temporarily boosted cannabis sales with artificially inflated demand, but since peaking in June 2021, total sales have declined by 30%, with the downward trend still continuing.‍

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California has its share of challenges, but it’s far from alone. Other mature markets in the region have faced similar struggles, with total sales declining between 23% and 41% from June 2021 to June 2025.

While some states like Colorado and Oregon appear to be stabilizing after years of decline, the trajectory of the California market remains more uncertain. Given the dramatic surge in growth during the pandemic, California may simply have further to fall.

With sustained year-over-year declines in total sales, strong domestic competition, and a lack of regulatory relief, including a recent increase to an already large tax burden, it’s reasonable to predict that this downward trend could persist in the near term.

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Michigan Outlook

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In its early years, the Michigan cannabis market experienced a boom, with sales growing at triple-digit rates. Growth remained strong into 2021, rising 14% between the first half of 2021 and the same period in 2022. However, by June 2023, that growth had slowed to just 2% year-over-year. The signs of a tapering market have become even more apparent: growth in June 2024 was only 5%, and by June 2025, the market saw a -2% year-over-year decline.

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It’s common for new cannabis markets to surge early on as they satisfy pent-up demand, eventually reaching a more stable plateau. In Michigan’s case, this natural maturation coincided with the emergence of new competitors in the regional landscape.

Missouri entered the market in February 2023, the same year Michigan’s year-over-year growth slowed to single digits. Then, in 2024, Ohio, home to 12 million people directly south of Michigan, launched its own recreational cannabis program. And in 2025, Minnesota, another neighboring state, is set to do the same—further reducing reliance on Michigan’s market.

All of this raises a critical question: can the growth trajectory we’ve come to expect from Michigan continue, or are we beginning to see cracks in the armor of what has been the Midwest’s dominant cannabis market?

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Conclusion

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Will Michigan surpass California as the largest cannabis market in North America? Only time will tell. California’s continued contraction certainly makes that possibility more realistic. However, the era of explosive growth in Michigan appears to be behind us, with the market now posting low single-digit—and even negative—year-over-year growth.

It begs the question: How can a state with just 10 million people outperform the largest state in the country? The answer lies in a unique mix of loose regulations, minimal competition, and a regional consumer base that resembles something closer to 50 million people rather than 10. For years, Michigan has served as the de facto cannabis supplier for much of the Midwest.

But as nearby states come online and demand begins to recede, will Michigan’s ultra-low prices spark a reckoning within its own domestic market?

At Headset, we’ll continue to monitor the data, tracking trends across markets, brands, and retailers to bring you a clear view of what’s happening tomorrow, today.

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