The United States’ cannabis market is fragmented due to the fact that the plant remains illegal on the federal level. Cannabis products cannot be transported across state lines, and regulations vary widely from state to state. Against this backdrop, it is difficult to establish a national brand. Difficult, but not impossible.
California is the birthplace of cannabis culture, the first state to adopt legal cannabis, and the world’s largest legal cannabis market. California is where product innovations are invented, tested, and refined. California sets the trends and the brands that achieve success there are sought after in other markets. A review of the top national cannabis brands for 2025 has 7 of the top 10 originating in California.
In order to do business in other states, California brands usually need to establish partnerships with businesses already operating in the target state. Collaborating with local operators offers several benefits for the out of state company, including regulatory compliance, market understanding, access to established infrastructure, cost efficiency, brand reach and credibility, diversification of revenue streams, and community connection.
How to Invest
Most consumer cannabis brands are private enterprises, but there is a compelling way to invest in the spread of California cannabis culture across the United States. Investors should be paying attention to partner organizations like distributors and processors. These are the companies that enable market penetration for the consumer brands, and some of them are public.
A prime example is LEEF Brands Inc. (CSE: LEEF) (OTCQB: LEEEF). LEEF itself is a leading provider of extraction services in California but is expanding into other states as opportunities arise. The company recently announced a move into New York that could have a profound impact not only on LEEF but also on the market penetration for California brands in the explosive and relatively young New York legal market.
LEEF Brands uses proprietary technology to turn bulk cannabis into a wide variety of the most in-demand products on the market. The company has its own small retail operation and brands which allow it to experiment with formulations, but the vast majority of its business is focused on providing retail brands with the extracts that will fuel their success.
LEEF has been generating about $30 million in revenue annually for the past three years in California alone. The company works with a high percentage of the state’s top retail brands, and many of those brands have operations in other states. The brand partners have been asking LEEF about expanding to other markets, and the company took the plunge into New York. LEEF is acquiring an existing license with a 7,000 square foot facility and already has the extraction equipment ready to implement in New York.
The company anticipates minimal capital requirements to scale up operations quickly and is looking to leverage existing relationships with California brands to jump start sales.
The New York Opportunity
LEEF extracts form the basis for edibles, vapes, concentrates, topicals, and beverages. According to Headset.IO, a cannabis industry data firm, New York’s February 2025 cannabis sales totaled $89.48 million. This number would conservatively track to about $1.1 billion in annual sales in only the third full year of the adult-use market. Flower and pre-rolled cannabis cigarettes accounted for about 52% of those sales, while the other categories that utilize extracts made up the other 48%. This ratio is similar to the figures in California.
As the legal cannabis market matures across the globe and innovative products are researched and developed, extract-based products are becoming increasingly prominent. New York is no different. The New York Cannabis Advisory Board (CAB) projects that “while flower will remain the dominant product category, demand for value-added products such as vapes and edibles is expected to grow significantly, fueled by innovative product forms and formulations.”
The sales numbers for New York have been achieved with less than 300 adult-use dispensaries operating statewide. Based on its data analysis, the CAB is advising that the state could support approximately 1,600 retail dispensary licenses as it continues to mature. Suffice to say there is plenty of headroom in the New York cannabis market, and extracts are a prime category to experience high growth.
Until very recently, cannabis brands had to invest as a “True Party of Interest” in a New York-licensed processing facility in order to sell products in the state. That changed with the introduction of a new license type that now allows brands to enter the market through partnerships and white label agreements with existing facilities. This development sets LEEF Brands up perfectly for a smooth and rapid entry into New York with its proven extraction services.
Why LEEF?
LEEF Brands has been teetering on the edge of becoming cash flow positive after several years of heavy investment into its infrastructure. The company is making a big move this year to capitalize on those investments by planting the first crops on what will be one of the world’s largest outdoor cannabis farms, LEEF’s wholly-owned Salisbury Canyon Ranch near Santa Barbara.
The company anticipates the vertical integration of its own cannabis production will cut its raw feedstock costs anywhere from 40% to 65% depending on the type of material. Meanwhile, LEEF has increased production capacity for its three lines of extract types (ethanol, solventless, and hydrocarbon) by about 50% on average. The combination of these moves, along with the revenue generated by the expansion into New York, have the potential to create rapidly increasing profits over the coming quarters.
Source: LEEF Brands Corporate Presentation
LEEF currently trades with a valuation ($24 million) significantly below its annual revenue number ($30 million), offering investors an opportunity to potentially realize gains as the company grows. Keep an eye on the growth plan, and take a look at the company’s corporate presentation. There is a lot to like here.
