Although 2022 was a roller coaster for many industries, very few industries have been as exciting (or as chaotic) as cannabis. And things aren’t slowing down.
The industry is witnessing some major changes all the way down, from which products are stocking shelves to legal reform and multi-billion-dollar acquisitions. Staying ahead of the curve and understanding the state of the industry is crucial to making sure your business is able to survive the industry’s volatility.
Increased legalization
Although federal legalization remains an obstacle to businesses across the country, momentum at the state level continues to drive the industry forward. With the recent additions of Missouri and Maryland, 21 states have legalized recreational cannabis so far. Despite temporary defeats, cannabis advocates in Arkansas, North Dakota, and South Dakota have refused to yield their demand for reform.
Last summer, Florida’s Supreme Court shot down a pair of recreational petitions, but advocates have returned with a more legally sound initiative that could put cannabis back on the ballot. Furthermore, Oklahoma citizens will be voting on the approval of adult-use marijuana in a special election to be held on March 7, 2023, after the Secretary of State’s office failed to verify the signatures necessary to bring the market to vote back in November.
Nearly two-thirds of the country currently supports federal legalization, a figure that is only going to continue to rise as increased awareness is brought to the benefits of decriminalization and public stigma fades. President Joe Biden himself has advocated for federal reform, having pardoned individuals convicted of simple marijuana possession under federal law back in October.
Advanced innovation
With recreational cannabis now legal in 21 states and medical in 39 states, the cannabis industry has witnessed nearly unparalleled growth over the past couple years. Loaded with potential, the emergent industry has driven a demand for increased innovation at both the consumer and business level.
Cannabis-infused products and edibles have provided an attractive entryway for new customers who haven’t tried cannabis before or may be intimidated by smoking. Long-time consumers who are already familiar with cannabis now have access to new and exciting cannabis strains that were previously difficult to obtain. This new interest in specific flavor profiles and psychological effects has fueled the development of highly specialized products, and it’s possible that consumers may have access to personalized strains in the near future.
Additionally, businesses themselves are benefiting from the influx of new technology. With modern advances in operational technology, cultivators are experiencing never-before-seen productivity in growing, manufacturing, and distribution. This means more overall products are being delivered to store shelves and at a fraction of the cost.
Celebrity partnerships
Due to both regulatory obstacles and the inability to leverage many traditional advertising channels in the same way other industries do (such as Google and Facebook), cannabis brands must get creative in their advertising.
Celebrity endorsements — or even celebrity-headed brands — lend legitimacy to a brand and inspire trust in potential customers. By giving a face to a brand, cannabis businesses are able to establish themselves as a reputable source for cannabis consumers — and the bigger the name, the bigger the leverage. Celebrities across many medias have invested in or established their own cannabis ventures, including singer Justin Bieber, boxing legend Mike Tyson, and ex-NFL tight end Rob Gronkowski.
Weedmaps, the leading online marketplace for cannabis consumers, partnered with Wheelhouse Labs and rapper Killer Mike to develop Tumbleweeds with Killer Mike, a four-part docuseries celebrating the evolution of cannabis culture in New York, Las Vegas, San Francisco, and Chicago.
Health and wellness messaging
Part of cannabis’ success in acquiring public support for legalization has been the major increase in health and wellness messaging. Cannabis has been in the research spotlight for years, and now some researchers are learning that some compounds in cannabis may have anti-cancer and anti-inflammatory properties. Not only does cannabis itself possess these properties, but scientists may be able to synthesize new compounds to replicate naturally occurring cannabinoids.
In general, many people have already been looking for alternatives to traditional medicine and drugs, and cannabis is increasingly seeming like the best substitute. The plant has witnesses major success in alleviating symptoms in patients suffering from illnesses such as depression, epilepsy, multiple sclerosis, cancer, glaucoma, Parkinson’s disease, Crohn’s disease, and more. As awareness grows, so will the demand for cannabis products as an alternative to traditional medicine.
Cannabis is also seeing increased support as a more health-conscious alternative to alcohol consumption, especially when it comes to edibles and infused-beverages. Just like alcohol, cannabis induces psychological effects when consumed, but differs in that it lacks many of the alcohol-associated side-effects such as hangovers, physical addiction, liver disease, and alcohol poisoning.
Continued consolidation
As with any other emergent industry experiencing astronomical growth rates, the cannabis industry is aggressively consolidating through mergers and acquisitions. Smaller local operators are being absorbed by larger multi-state businesses as they expand their footprint at the state and federal level. Although federal legalization may still be a ways away, multi-state operators are hoping to capitalize on new jurisdictions before the market is saturated.
Much of the M&A activity in the cannabis space is a result of the industry’s overall volatility, which is to be expected with a relatively immature market history and varied legal status across regions. This volatility means that although there’s a lot of potential for up-and-coming businesses who play their cards right, many other businesses will struggle to establish a secure a foothold.
With this in mind, the biggest names in cannabis — Curaleaf, Trulieve, Aurora, Green Thumb, Tilray, and more — are poised to get even bigger as more states pass legislation around recreational use and small to medium-sized businesses look to cash out.
Final thoughts
The cannabis industry transforms wildly every year amidst major legal reform, advances in technology, evolving public opinions, and changes in company ownership. Interested in learning more? Check out our white paper—”Top 5 Cannabis Trends for 2023.”
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