At the start of 2020, cannabis industry insiders expected it to be a very big year, but then, COVID-19 hit and everything changed. The global pandemic brought some delays and some positive surprises for the industry, and it will continue to have a significant effect on the industry in 2021.
Here are five key cannabis industry expectations and trends to watch for in the coming year.
Federal Decriminalization and Possibly More
President-elect Joe Biden and Vice President-elect Kamala Harris have publicly stated that cannabis decriminalization will be a top priority for the new administration. That’s the first big step toward the realization of other significant legal changes at the federal level. For example, it opens the door to improved banking for cannabis and cannabis-related businesses and possibly federal legalization in the future.
This month, Congress voted to decriminalize and tax marijuana at the federal level and open up access to loans for cannabis businesses. Of course, it remains to be seen what happens when the bill gets to the Senate. In the House, only five Republicans supported the bill, and six Democrats opposed it.
Expanded Legalization = Growing U.S. Market and More Jobs
Cannabis was a big winner on Election Day 2020. Every state that had cannabis legalization (recreational and/or medical) on the ballot saw residents vote in favor of the measures. Arizona, New Jersey, Montana, and South Dakota voters approved recreational cannabis, and South Dakota and Mississippi voters approved medical marijuana.
With adult-use cannabis now legal in nearly a third of the states in the country, the majority of Americans have access to medical and/or recreational marijuana. The momentum is showing no signs of slowing down. The U.S. market is growing quickly, adding jobs, and helping the economy. There is no reason to suspect this growth trend will slow down in 2021.
Acquisitions and Consolidation
Fragmented ancillary services companies are expected to start consolidating in 2021 as larger brands with deeper pockets acquire smaller players. As discussed in Cannabiz Media’s 2020 Point of Sale Software in the Cannabis Industry report, “With 10 point of sale firms controlling 80% of the market, it will be hard for the remaining 58 to thrive.”
The same is true among cannabis license holders as smaller dispensaries, growers, and other businesses across the supply chain are acquired by larger multi-state operators (MSOs). We’ve already seen MSOs like Columbia Care, Trulieve, and Curaleaf acquiring and consolidating smaller players, and this trend will continue in the future.
With market growth comes a need for brands to differentiate themselves in consumers’ minds in 2021. For example, no longer can license holders rely on budtenders to recommend their brands. Instead, companies need to make strategic investments to establish a brand position and own that space in the marketplace.
The goal is to motivate buyers to ask for specific brands by name by educating them about the key differentiators and benefits. When buyers have the right knowledge to make informed purchase decisions, the brands that have invested in positioning and differentiation will win by gaining more shelf space and distribution. This is true across the supply chain.
Cannabis as a New Normal
In some states, cannabis was considered an essential industry during COVID-19 quarantines. If you do the math, it’s not a big stretch to say that cannabis is becoming more mainstream every day. Consider this equation:
Essential industry designation during COVID-19 pandemic + changing public perception + more states legalizing + a new presidential administration = a growing future of opportunity for the cannabis industry for businesses and consumers
Key Takeaways about the Cannabis Industry in 2021
While 2020 brought unexpected challenges to the cannabis industry, it also brought new opportunities that pave the way for even more growth in 2021. One thing is certain in the coming 12 months – the business, political, and social environments are more favorable toward cannabis than ever.
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