(Image Credit: IMAGN) Jamie Norton, left, and Joshua Saunook transport harvested marijuana on the Great Smoky Cannabis Company’s farm in Cherokee, August 8, 2024.
Los Angeles, California – TerrAscend Corp., one of North America’s leading cannabis companies, announced this week it will exit the Michigan market entirely, divesting its 20 retail dispensaries, four cultivation and processing facilities, and related real estate. The decision, while geographically focused, reflects a broader instability facing the legal cannabis industry—even in states like California, where use is widespread and long-legalized.
The company’s exit, expected to be completed by late 2025, will result in a 21% reduction in its workforce of 1,200 employees. TerrAscend leadership framed the decision as a strategic reallocation of resources, citing Michigan’s market as “extremely difficult” and pledging to concentrate on more profitable areas like New Jersey, Pennsylvania, and California.
But California’s inclusion in that list raises a question: if the legal cannabis market here is still considered a core region for investment, why is the industry in apparent decline?
At first glance, California seems like a cannabis success story. It was the first U.S. state to legalize medical marijuana in 1996 and the largest to legalize recreational use via Proposition 64 in 2016. The market is enormous. According to a recent UC San Diego study titled “Impact 64,” based on a survey of over 15,000 California adults, 37% reported using cannabis within the past three months. Among those users, 38% consume multiple times a day. Flower, edibles, and vape concentrates are the most common products. Eighty-two percent of users reported positive effects on mental health; 81% said the same for emotional health.
Yet the legal market is faltering. A substantial tax hike on cannabis took effect July 1, raising the state excise tax from 15% to 19% — a change rooted in a three-year-old political deal that was meant to give the market time to stabilize. The increase moved forward despite opposition from growers, retailers, and consumer advocates, who rallied at the state Capitol and won the support of Governor Gavin Newsom. They argued the higher tax could drive away customers and further squeeze businesses already operating on razor-thin margins.
The new tax hike comes at a time when cannabis prices have plummeted due to overproduction and limited retail access. Most cities and counties still prohibit dispensaries, effectively capping the growth of the legal sector. Meanwhile, the California Department of Cannabis Control estimates that licensed sales account for less than 40% of cannabis consumption statewide — a signal that the illicit market remains dominant, in part because legal cannabis is so heavily taxed.
The “Impact 64” study also highlights a persistent education gap. While 78% of users said they felt comfortable discussing cannabis with their primary care provider, only 66% had actually disclosed their use. Physicians, in turn, were rarely viewed as reliable sources of cannabis-related advice. This disconnect has consequences not just for personal health but also for public trust in the legal market.
Professor Linda Hill, the study’s principal investigator, stressed that while cannabis use is now normalized, knowledge of legal guidelines and safety practices is often lacking. “We need more targeted education initiatives for both cannabis users and medical providers,” she said.
In other words, normalization hasn’t translated into sustainability. Even in California—the heart of American cannabis culture—the legal market continues to struggle under the weight of overregulation, overproduction, and underwhelming support. Until those structural challenges are addressed, the cannabis economy may remain more theoretical than real.
