Cannabis: The Covid Growth Industry
The biggest trade show in the Cannabis business concluded in mid-October in Las Vegas. There was a general “high” over the future prospects of the industry.
Despite (or perhaps, because of) a global pandemic, ballooning inflation and an ongoing fight to legalize marijuana at the federal level, the cannabis industry in America is flourishing.
In 2020, sales hit $20 billion; in 2021, sales are on track to top $26 billion and are projected to grow to $50 billion in 2025, according to data from Marijuana Business Daily shared at the MJBizCon, the industry’s annual trade show. AT that level in sales, the cannabis industry would be larger than the craft beer industry.
Chris Walsh, chief executive officer and president of MJBizDaily, said “These are potentially conservative numbers with what we see playing out,”. Snowballing US sales shouldn’t come as a surprise as the majority of Americans live in a state where some form of cannabis is legal. More than two-thirds of US states have legalized medical cannabis, and of those, 18 have legalized cannabis for recreational use, according to the National Conference of State Legislatures.
Pandemic-Era Sales Boost
The cannabis industry got a large boost from so many of us stuck at home over the last year. Folks forced to stay home with little to do, receiving stimulus checks were able to spend in dispensaries in certain states deemed essential businesses. Many states, including early adopters like Colorado, posted record sales in 2020.
But the past 12 to 18 months show there is more to the story than a Covid bump, Walsh said. Sales continued to accelerate at a record pace in markets across the US — notably in established states, such as Colorado, Washington and Oregon, Walsh said.
“You’re seeing the next phase of a maturing industry take hold here,” Walsh told CNN Business.
Not long ago, quarter of a billion-dollar deals were rare in this business. Now they’re happening in quick succession: The latest being e-commerce and tech firm Dutchie, which this month raised $350 million in its latest investor round.
The industry is also expanding rapidly and creating jobs, said Karson Humiston, CEO and founder of Vangst, which runs a cannabis industry-centric job recruiting site.
It’s estimated that there were 321,000 full-time jobs in the cannabis industry in 2020, up from 234,700 the year before, according to a report released earlier this year from Leafly and Whitney Economics.
“Take a look around,” Humiston said, gesturing to bustling crowds in the exposition hall. “People want to get out of their old-school, dying industry, and they want to move into cannabis. This is it. Now is the moment to get involved because it’s never going to be this small again.”
A Nascent Industry
As with any new and emerging industry, there is no lack of challenges and uncertainties.
- The US Food and Drug Administration has yet to provide official guidance on how hemp-derived cannabinoids, such as CBD, can be included in commercial products
- California, the nation’s biggest cannabis market, continues to see sales siphoned to a large, unregulated industry
- The industry has grown less diverse over the last couple of years and programs to address social equity or repairing the harmful residue from the War on Drugs are still in their fledgling phase.
On Capitol Hill, federal marijuana reform is a top concern for many citizens, yet, due to a lack of consensus among lawmakers and industry members, change is not on the immediate horizon,
Walsh said: “Some want incremental, but necessary, steps such as banking and tax reform. Others hope to tackle legalization in one fell swoop with comprehensive legislation.
“I’m still doubtful that we’re going to see any significant federal reform next year … including in banking,” Walsh told CNN Business, referencing longstanding efforts to change federal law to allow state-legal cannabis businesses (and those that serve them) access to traditional banking services.
As marijuana remains a Schedule I substance, some financial institutions have been reluctant to serve the industry — leaving operators with the inability to get small business loans, pandemic relief or insurance and disaster aid. Operators flush with cash have significant safety concerns, such as theft, robberies, assaults and even murders.
Waiting is nothing new for the cannabis industry. Although it has been growing and expanding in leaps and bounds, legal progress has come in inches.
“I agree that it’s an uphill slog to see federal legalization, but what we’re putting on the table is inevitability,” Steven Hawkins, CEO of the US Cannabis Council and executive director of the Marijuana Policy Project, said during a MJBizCon panel on federal legalization. “When you get to the point when half of the country has legalized for adult-use, the stage is set for inevitability. And that begins to change the tone and tenor in Washington.”
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