As legalization expands to new regions and more products hit the market, the cannabis industry is booming. In a market that seems to experience major updates every week, what cannabis industry predictions are there for 2021? Read on to review what happened in the market last year and to expect to see this year.
The 2020 Cannabis Market
The cannabis market saw a lot of growth in 2020. In fact, US national cannabis sales increased 67% in 2020, the industry was worth $61 billion, and support for legal marijuana rose to an all-time high of 68%.
The cannabis customer base is also changing and growing– according to Eaze, the gender divide that used to exist is disappearing (especially in the baby boomer age group) and last year, nearly half of customers were female (compared to just 38% in 2018).
Legalization-wise, during the 2020 election Arizona voted to legalize recreational usage, Montana and New Jersey voted to legalize adult usage, and South Dakota voted in favor of medical and recreational usage.
2021 Cannabis Industry Predictions
1. More Legalization
The legalization of cannabis has become increasingly widespread, and that trend will continue in 2021.
According to Marijuana Moment, the states that are most likely to legalize recreational marijuana usage this year include Connecticut, New Mexico, New York, Rhode Island, and Virginia.
Additional states are experiencing a buildup of momentum, but legalization is a bit less likely due to remaining opposition from some top leaders. These states include Delaware, Maryland, Minnesota, Pennsylvania, and Wisconsin.
In terms of medical usage of cannabis, a few states are slated to legalize this year, including Alabama, Kentucky, and South Carolina.
2. Increased Sales
Related to increased legalization, one major cannabis industry prediction is increased sales. Did you know that on July 4, 2020 alone, more than $400 million worth of cannabis was sold? According to Linchpin SEO, the market has the potential to grow as much as $130 million per year in the near future.
Another contributing factor to the predicted increased sales is the fact that more and more businesses are selling cannabis products, and in particular, products containing cannabidiol (CBD). According to The Motley Fool,
“What Wall Street and investors seem to find most attractive about the rise of CBD is that it may appeal to consumers who might otherwise want nothing to do with the cannabis industry. Since CBD-based products typically contain no traces of, or minute amounts of, tetrahydrocannabinol (THC), the cannabinoid that gets a user high, consumers on the medical and recreational side of the equation tend to be more willing to try CBD-based products.”
Furthermore in 2019, CBD sales grew 71.3% in the natural channel alone to $91 million in sales, and sales grew an impressive 872% in the mainstream channel. Mainstream adoption is largely due to the 2018 Farm Bill which made it so that hemp is no longer a “controlled substance,” helping risk-averse retailers embrace selling hemp-derived CBD topicals. Many specialty retailers now carry CBD products, as well as larger chains like CVS, Walgreens, Rite Aid, Ulta Beauty, GNC, Urban Outfitters, Whole Foods, Target, and more.
3. A Broader Product Offering
One cannabis industry prediction is that the number of types of cannabis products available on the market will increase substantially. On one hand, it’s likely that new strains will be created, and on another hand, particular products are projected to become more popular and readily available. For example, Molson Coors has already created a CBD-infused sparkling water to sell in Colorado. The drink, called Veryvell, contains zero calories and zero sugar and is available in three flavors: Focus (grapefruit tarragon), Mind & Body (strawberry hibiscus), and Unwind (blueberry lavender). On the edible front, it’s predicted that the variety of products available will increase.
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4. Diverse Customers
As time passes, the cannabis consumer base grows more diverse. Linchpin SEO predicts that there will soon be more older and female customers, as well as a greater mix of both recreational and medicinal cannabis users.
If you’re curious about the current breakdown of cannabis users by age, check out the below chart from Flowhub:
5. New Use Cases
During a time when cleanliness is on the forefront of many people’s minds, who could have guessed that cannabis could potentially be used as a health and safety product? According to the US National Library of Medicine and National Institutes of Health,
“Several cannabinoids have been found to have potent antimicrobial activity against Gram-positive pathogens such as MRSA isolates. Endocannabinoids have also been shown to be effective in eradicating biofilms.”
This is just one example of a new use case for cannabis and as legalization and research efforts continue, it’s predicted that even more will arise.
6. Banking and Finance Updates
One major cannabis industry growing pain that has remained is the issue of banking. However, changes could be made on that front this year. According to TRYM,
“All eyes are on the United States Senate this coming year. Many believe they will finally pass legislation to grant legal cannabis businesses access to banking and financing services. The cannabis industry’s ‘Essential’ designation is ironic when many have to lug around bags of cash, putting them into vulnerable and dangerous situations.
Opening up banking services alone will make a huge impact on the legal marijuana industry as a whole. Investment would flow in more, valuations might increase, and most importantly, marijuana business transactions will become much easier.
A cannabis company could seek bridge loans from the bank rather than taking hard money loans which come at increased risk and high interest rates. In the expanding legal marijuana industry, scaling is important to maintain market share. But scaling requires an injection of money that operators may not have.
The ability to turn to banks for traditional financing would help organizations of all sizes grow their business in the legal marijuana industry.”