MJBizCon, the cannabis industry’s annual trade show held in Las Vegas every June, is always a great time to figure out what lies ahead for this exciting market. With so many new developments happening at once and even more being planned for 2021, it can be hard to predict which scenario will play out.
MJBizCon 2021 is a conference that will be held in New Orleans, Louisiana. The conference will focus on the business of cannabis and its many industries.
A detailed examination of patterns and forecasts shows a complicated picture.
The biggest B2B cannabis industry event, MJBizCon 2021, has reopened its doors to real people in a sign that the world is returning to normal.
This is the time of year when tens of thousands of industry professionals converge on Las Vegas to show off their wares, network, attend educational seminars, shake hands (or maybe bump fists this year), smoke a few blunts, and close a lot of transactions.
Chris Walsh, CEO and Founding Editor of MJBizCon, kicked off the celebrations with his annual State of the Industry and Predictions for the year 2022 talk. Walsh, who has covered the sector for XX years, provided a positive image of a robust and rising industry that is gaining popular acceptance.
Walsh did, however, point out certain concerning industry tendencies that need to be addressed. Here are a few of the highlights.
Cannabis is expected to be worth $50 billion by 2025.
Despite the epidemic and a slow economy, cannabis sales continue to outperform forecasts. The sector is expected to produce $26.4 billion this year, according to experts, and Walsh and other industry analysts anticipate that amount will quadruple to $45.9 billion by 2025. That enormous sum would dwarf both the yearly earnings of craft beer and the global opioid industry, according to some estimates.
Last year, California, the world’s biggest cannabis market, witnessed a 15% increase in sales. Arizona, Illinois, Massachusetts, Oklahoma, Nevada, and Pennsylvania, according to Walsh, will soon join “the billion-dollar club.”
Other cannabinoids are becoming more popular.
While THC and CBD get all the attention, other cannabinoid chemicals in the plant, such as CBC, CBG, THCV, and CBN, are being accepted by the business. Delta-8 and HHC are two more contentious chemicals that, although having psychotropic effects, are not outlawed in many jurisdictions.
People are realizing that cannabis isn’t a one-trick pony as they learn about the medicinal effects of these other chemicals. This gives a chance for entrepreneurs to broaden the plant’s appeal and reach.
According to Walsh, the edibles market share of goods containing CBN has increased by 14.3 percent in California.
Legalization in the states is moving full speed ahead.
While the federal government drags its feet on national legalization, state legalization is well underway. Marijuana is legal in 18 states and Washington, D.C. for adults. In 37 states, medical marijuana is legal. Since early November of 2020, more states have legalized than in the preceding three years.
Here’s a sample of what I’m talking about.
- Montana is a state in the United States (recreational)
- Vermont is a state in the United States (recreational)
- Arizona is a state in the United States (recreational)
- New Jersey is a state in the United States (recreational)
- South Dakota is located in the United States (medical and recreational)
- Mississippi is a state in the United States (medical)
- Alabama is a state in the United States (medical)
- Connecticut is a state in the United States (rec)
- New York is a city in the United States (rec)
- New Mexico is located in the United States (rec)
- Virginia (Virginia) (rec)
In 2022, Walsh expects that at least four states, including one “sleeper,” would legalize medicinal or recreational marijuana. Texas, we’ve got our sights on you.
Investments are on the rise.
The epidemic hampered investment in the cannabis business, as it did in the rest of the economy. However, several high-profile mergers and acquisitions this year have shown that investors are once again willing to put their money into cannabis firms.
Capital raises for Dutchie ($350 million), TrueLieve ($350 million), and GTI ($217 million) are just a few recent instances.
Mergers and acquisitions are on the increase.
Mergers and acquisitions activity will return to normal once the economy recovers. The cannabis market has seen greater consolidation, much as it did before the epidemic, as corporations continue to be strategic in their acquisitions and investments.
Truelieve and Harvest for $2.1 billion and Jazz Pharmaceuticals and G.W. Pharma for $7.2 billion are two major M&A deals.
MSO has also expanded its scope. Green Thumb Industries and Verana operate in 14 states, while Truelieve operates in 11.
More money, more issues
But, despite Justin Beiber’s new cannabis brand’s name, not everything is rosy for cannabis. Walsh drew attention to a number of troubling patterns that continue to affect the sector.
For example, in California, the illegal market thrives and eats into the profits of a highly controlled legal sector.
High taxes and the 280e tax regulation, which prevents companies from deducting any expenditures from their gross revenue while “trafficking” schedule I and II banned drugs (read: cannabis), have hampered the sector and made it prohibitively costly to conduct business.
Furthermore, the enormous promise of social fairness has generally fallen short. There are problems with well-intentioned initiatives all around the nation. According to Leafly’s Jobs Report 2021, African Americans make up around 13% of the US population but just 1.2 percent to 1.7 percent of the industry’s company owners.
Equally alarming is the fact that the number of minority CEOs in the cannabis industry is actually declining. In 2019, minorities represented nearly 28% of the cannabis executive team, according to Walsh. Minorities will account for 13.1% of executives in 2021. This is a tenth of a percent more than the national average of 13%. So much for cannabis redressing the War on Drugs’ wrongs.
Predictions for 2022
Despite these unfavorable patterns, Walsh remains optimistic about the future. “Despite the lockdowns and political, social, and economic instability,” he writes, “the cannabis sector has persisted – and been declared important.”
Here are some of his 2022 predictions.
- With three to four mega-mergers in the United States and Canada, this will be the largest year for M&A ever.
- While the FDA will not allow ingestible CBD, states will be at the forefront of the recovery. He believes that California’s new legislation legalizing CBD in food, drinks, and other ingestible goods “may be a game-changer.”
- Social consumption will advance significantly, with Nevada leading the way.
- Mississippi and Kansas are among the front-runners for medicinal marijuana legalization, while recreational marijuana might be legalized in Rhode Island, Maryland, Delaware, Oklahoma, and Ohio.
MJBizCon 2021, the Outlook for Cannabis is Rosy—and Not So Rosy. MJBizCon is an annual conference that takes place in Las Vegas. The event has a focus on the cannabis industry and related topics. Reference: mjbizcon 2021 floor plan.
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