The California Exit Index: MSOs Keep Fleeing, State Keeps Dying

Boof du Jour
Jul 25
3 min read

LOS ANGELES, CA — July 2025

In what has become a monthly ritual of corporate self-immolation, Cresco Labs announced its formal exit from California — the latest name added to a now-familiar roster of publicly traded cannabis companies that tried to “scale California” and instead got scalped.

Let’s be clear: this isn’t news, it’s trend reporting from the morgue.

Cresco joins a growing list of hopeful multistate operators (MSOs) who entered California like it was Rome and left like it was Pompeii. Columbia Care, MedMen, Trulieve, and now Cresco have all walked the same delusional path: show up late, spend wildly, underdeliver, lose millions, blame the market, and quietly slip out the back with a press release no one reads.

But Cresco’s departure isn’t just another bad earnings call. It’s the closing bell on the fantasy that California can be “conquered” by corporate cannabis — a myth cooked up in PowerPoint decks, floated to VCs in Echo Park lofts, and now buried in licensing debt and Distro rot.

“Strategic Streamlining” = Fuck This Shit

Cresco called the move part of a “strategic national footprint optimization,” which in MSO-speak means: we torched our margins, lost control of distro, can’t compete with legacy, and have absolutely no idea what the fuck we’re doing.

Their California ops — including distribution via Continuum — are being offloaded like cursed real estate in a horror movie. The buyer? Whatever private equity-backed scavenger is dumb enough to think they can fix the most broken supply chain in weed.

Meanwhile, Cresco's CEO told investors:

“This move reflects our commitment to shareholder value and operational excellence.”

Translation: “Please don’t tank the stock. We just got out of lease obligations in a state where we’ve never been profitable.”

California: Where Dreams Go to Burn

California remains the largest weed market in the world — and somehow the worst place to do business. A bureaucratic nightmare, a taxation sinkhole, and a playground for unregulated competition with better product and lower prices.

Let’s recap what these MSOs were up against:

$161 million in uncollected cannabis taxes
A licensing system held together by duct tape and PDF forms
A distro chain that made money moving nothing
Retail saturation in markets no one shops in
And a regulatory body that couldn’t enforce a traffic cone

Cresco bet they could fix that with compliance seminars and shrink-wrapped vapes. Instead, they got boxed out by underground brands that don’t need to clear three meetings to launch a new SKU.

Legacy Wins Again

The part no one wants to say out loud: legacy brands are still running circles around corporate ones.

Because you can’t buy credibility in California. You can’t scale a culture you don’t understand. And no one’s buying weed from a company that looks like it sells consulting services to Staples.

Cresco’s brand “Good News” was priced for Iowa soccer moms but forced into stores next to bulk indoor from growers who actually give a shit. Their distro arm tried to act like a gatekeeper in a market where the gates are made of papier-mâché.

And that “House of Brands” model? Let’s just say the house collapsed, the roof caved in, and the value got smoked by half-priced eighths in jars with cartoon monkeys.