The past year of economic downturn has tested the resiliency of every industry. Cannabis, once touted as “recession-proof,” hasn't been immune. Public safety challenges, an oversaturated market, and federal inaction have all led to a number of challenges for the nascent industry.
Yet, one of the world’s fastest-growing industries remains strong. Revenues are projected to hit $32 billion this year (a nearly 50% increase from 2020), adult-use markets are about to take off in at least four more states and public support for legalization is at an all-time high.
We’re at a watershed moment for the industry. Legalization is inevitable. Where we move next gives us a rare opportunity to choose whether we are on the right or wrong side of history.
Over the last few years, the cannabis market has experienced explosive growth. State-of-the-art dispensaries popped up across the country, stocking the latest products and providing top-notch customer service. Even during the 2020 economic crash induced by the pandemic, sales were booming, with dispensaries deemed “essential” in many states.
But 2022 has proven that cannabis is not invincible. The industry has become a patchwork of individual state markets, some of which are still growing, while others reach saturation. These states are flooded with more products than demand, sending prices lower and forcing some retailers out of business.
Robberies and violence at dispensaries have surged, making it even harder for businesses to stay afloat. Between the easy resale value of cannabis products and the fact that about 90% of dispensary transactions are still handled in cash, dispensaries have become a top target for smash-and-grabs.
According to our 2022 company data, the numbers tell it all.
Despite these challenges, 2023 is looking bright. A November Gallup poll found that nearly seven in ten Americans are in favor of legalizing cannabis. Americans are now smoking more cannabis than tobacco. By 2030, there will be an estimated 71 million cannabis users, creating a projected $57 billion in sales.
This sentiment is also reflected politically. We’re closing 2022 with big wins in Maryland and Missouri, the newest states to legalize recreational cannabis. New Jersey and New York City awarded their first licenses—two of the largest soon-to-be markets. Several other states are slated to enact or put cannabis legalization directly to voters in the new year, moving us closer to the inevitable.
Innovations in technology have continued to normalize the industry. Modern technology solutions are essential for dispensaries to compete with the illicit market, and have historically been one of the biggest barriers to safe and easy access to cannabis. From cashless and digital payment options to sophisticated point of sale solutions, the industry is making great strides to ensure that cannabis is afforded the same tools as every other legal industry and has the technology backbone critical to its next stage of growth.
This momentum has lured more tech giants into the space. Uber began piloting cannabis delivery services in Canada. Apple updated its App Store Review Guidelines to support apps handling the sale and delivery of cannabis. Amazon has been outspoken on its pro-business, pro-legalization stance, actively lobbying for federal legalization and easing drug test requirements for cannabis among its workforce.
As a potential recession creeps closer, cannabis represents a major economic opportunity.
State and local taxes from cannabis sales are a lifeline for governments to fund essential community infrastructure and services. As of the close of 2021, the industry has brought over $10 billion in tax revenue across 11 states over the past seven years, with over $3.7 billion of tax revenue generated from the legalization of marijuana in 2021 alone. States are using these new resources for everything from public health services and criminal justice reform to public school systems to after-school and healthcare programs.
Nearly half a million Americans now work in the cannabis industry. With new markets opening in 2023, nearly 70% of cannabis companies say they expect to increase staff in the new year - a bright spot amid ongoing layoffs. From budtenders to trimmers to engineers and sales leaders, cannabis attracts high-level talent due to its cultural reputation, growing diversity and robust employee benefits. Vangst, the leading cannabis hiring platform, found 100% of companies surveyed in their 2021 Salary Guide offered benefits to full-time employees.
Policymakers, federal officials in particular, can help turbo-charge the industry’s next stages of growth.
Cannabis is still federally classified as a Level 1 substance, which given the growing evidence of its health and wellness benefits, is ridiculous compared to other substances at this level like heroin and cocaine. Because dispensaries are not afforded the same federal protections as other commercial businesses, entrepreneurs face a wide range of complications, even in areas that are no-brainers for traditional industries, like obtaining comprehensive, affordable business insurance.
With President Joe Biden recently calling on multiple federal agencies, including the Department of Justice, to review cannabis’ classification as a controlled substance, we must argue forcefully for lower scheduling and, as a result, remove 280E from cannabis companies’ tax burden. We must also call on policymakers to approve the bipartisan SAFE Banking Act, which requires federal banking regulators to permanently halt penalties on financial institutions providing banking services to legal cannabis entities.
We are at the end of a gray area before cannabis becomes a more regular part of our lives. Working with policymakers to replace outdated regulations will lead to more benefits for our communities and society at large. Our industry is on the precipice of normalization, but it is up to us to seize this opportunity. We must speak loudly and with one voice to the transformative impact we know cannabis will make for our industry and communities.
This post originally appeared in Benzinga.
