On the surface, the pre-roll category has never looked stronger.
In 2025, pre-rolls overtook flower in unit sales for the first time in American legal cannabis, becoming the top-selling cannabis product on the market by volume. Revenue also climbed 9.8% year-over-year to nearly $3.6 billion, and unit sales increased 18.6% to 383.2 million. In a broader cannabis market that grew only 1.5%, pre-rolls clearly emerged as the industry’s top growth engine.
But while those numbers tell a bullish story about demand, they also mask a harder truth for producers and operators.
Pre-rolls may be winning with consumers, but for brands and manufacturers, the category is becoming increasingly difficult to navigate. Falling prices, rising competition and market saturation are turning one of cannabis’ best opportunities into one of its most challenging businesses.
The Real Cost of Growth
The first pressure point is price. The average pre-roll price dropped to $9.31 in 2025, down 6.6% from 2024 and nearly 20% below the 2022 peak of $11.70. This is good news for consumers and one reason the category may be broadening its appeal, but it is not always good news for operators.
When prices drop, brands must either find efficiencies in production or accept margin compression. And in cannabis, where taxation, packaging requirements, testing, compliance and state-by-state regulations already create high operating costs, there is only so much room to absorb smaller revenues from lower prices.
The 2026 Custom Cones USA State of the Pre-Roll Market Report makes clear that operators feel this pressure directly. Asked about the biggest threat to pre-rolls, 52.8% of surveyed producers cited oversupply and the race to the bottom on pricing. Another 18.1% pointed to regulatory and testing burdens.
Those concerns are especially meaningful because they come from operators inside the category itself. The companies making and selling pre-rolls are telling the market that growth alone is not enough. Without product differentiation, price competition can quickly erode the benefits of higher demand.
Competitive churn underscores this point. The number of brands selling pre-rolls in 2025 rose only slightly to 3,242, but beneath that relatively stable figure was major turnover: 589 brands active in 2024 disappeared from the market, while 661 new brands entered. This suggests a category that remains attractive but challenging.
For every brand that breaks through, another may be pushed out.
Winning Will Depend on Strategy
At the same time, not all operators face the same economics. House brands, which benefit from vertical integration, continue to enjoy meaningful advantages. In 2025, house-brand pre-rolls averaged a price of $5.33 per unit and a 55% margin, compared to $9.64 and 46.2% margins for non-house brands. Because they eliminate some middleman costs, vertically integrated operators can often compete more aggressively while protecting their profits.
Independent brands don’t always have that luxury. They may need stronger branding, premium positioning or a more specialized product mix to stay competitive.
See also: Buying Cannabis in Your Neighborhood
Where Brands Can Still Win
That is one reason products like infused pre-rolls and multi-packs matter so much. Infused products accounted for $1.68 billion in revenue and nearly half of total category sales dollars in 2025, while multi-packs dominated the sales charts with 90 of the top 100 products. These areas can offer stronger value propositions, larger basket sizes and a path away from pure price competition.
Branding will also play a bigger role moving forward. The report found consumers rank brand among the top three factors in choosing a pre-roll, alongside potency and price, yet most producers still use unbranded cones. That leaves space for disciplined operators to build stronger brand identities and customer loyalty, especially in a crowded market like pre-rolls.
There are encouraging signs on the production side though. More companies are using specialized grinders, sifters and cone filling machines in production, and many operators plan to expand their pre-roll lines. Innovations in machinery help smaller and mid-sized businesses scale more efficiently.
The opportunity is still real. The report projects total pre-roll sales will reach between $3.8 billion and $4 billion in 2026 and exceed $5.2 billion by 2030, so consumer demand is not the problem.
The challenge is in the execution.
Pre-rolls overtook flower because they are convenient, innovative and increasingly aligned with how people actually want to buy and use cannabis. But success in the category is no longer just about showing up with a decent product, it requires strong operations, clear positioning, efficient production and a plan to survive pricing pressure.
Cannabis has a new growth engine, that much is clear, the question now is which businesses are built to keep up with it.
