New York is the fourth largest state by population, and the second largest state (behind California) with legal adult-use and medical cannabis. It is a very new cannabis market with the first legal adult-use sales occurring in December 2022. As might be expected, sales there are skyrocketing with total revenue surpassing $1 billion as of the end of 2024.
Source: New York Office of Cannabis Management 2024 Annual Report
According to the Cannabis Advisory Board (CAB) and the Office of Cannabis Management (OCM), high sales growth is expected to continue. The agencies that oversee the industry in New York anticipate the state will reach $6.5 to $7.5 billion in annual sales by the year 2030. Hitting those numbers would require a 10X increase in cannabis production in the state.
There is clearly a major opportunity here for companies positioned to grow along with the market. Here we’ll take a look at a brand new entrant in New York, LEEF Brands Inc. (CSE: LEEF) (OTCQB: LEEEF). Though the company is just now opening up shop in New York, LEEF has years of experience in the world’s largest legal cannabis market – California. That experience has the potential to make LEEF’s transition to multi-state operations a fairly seamless and successful one.
LEEF’s Extraction Model
LEEF Brands is California’s leading provider of extracts, using 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 announced a few weeks ago it was taking 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.
New York a Prime Expansion Target for LEEF
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 sales totaled $89.48 million. 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.
Source: Headset.IO
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 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.
Now, in the early stages of legal sales, is an excellent time to establish a presence in the state. Regulators have had time to iron out the wrinkles and consumers have gotten used to the idea of legal cannabis. The table appears to be set for LEEF to significantly expand its business in a new and very robust market.
What It All Means for LEEF Investors
LEEF Brands expects to be cash flow positive this year, and is implementing several measures to increase margins and profitability across its operations. Currently operating with 32% gross margins, the company anticipates increasing that to about 54% by 2026. The biggest driver for margin improvement is the planting of its own Salisbury Canyon Ranch cannabis farm near Santa Barbara, with 187 acres of licensable land for cultivation. Providing its own raw materials for California operations will be a tremendous step forward for the company.
Source: LEEF Brands Corporate Presentation
The move into New York has the potential to add significantly to LEEF’s revenue stream, and could be the first of similar moves into other legal states. The company’s overarching goal is to become the world’s leading provider of cannabis extracts, and there are no better markets than California and New York to begin that quest.
LEEF currently trades with a market cap of about $29 million, roughly equivalent to its historical annual revenue number. With sales growth and margin improvements expected, investors should be looking for LEEF to trade with a multiplier more in line with other successful cannabis companies.
Interested investors can access the full LEEF Brands corporate presentation here.
