It’s looking gloomy out the in the world of cannabis at the moment. If you work in any industry section, dark clouds aren’t on the horizon; they are directly overhead. Companies are announcing layoffs or going out of business on a weekly basis. Plant-touching companies are in the middle of a lousy-tasting sandwich. On one side, they’re facing high taxes, higher labor costs, and significant regulatory hurdles. On the other, they’refacing nimble-footed gray market competitors often offering high-quality products at massive price discounts to consumers. Police are wary of getting involved with more pressing concerns and negative PR associated with raids on largely peaceful, if illegal, dispensaries.
Oversupply and price compression are significant crises for cultivators across the US. The wider macroeconomic environment going forward doesn’t look much better, with the recession being the consensus opinion.
More bad news can be expected in 2023. However, the legal cannabis industry is here to stay. There are natural and tangible reasons for optimism in 2023 and beyond. Here are just five.
More bad news can be expected in 2023. However, the legal cannabis industry is here to stay. There are natural and tangible reasons for optimism in 2023 and beyond. Here are just five.
1. Decline in arrests and more pardons
A slew of mass pardons should put a smile on everybody’s face. Gov. Ned Lamont’s clearing of almost 43,000 records of past marijuana convictions in Connecticut is the most recent. Expect more of this going forward.
A recent study by the American Medical Association found states that legalized adult-use cannabis saw a 40-76% reduction in cannabis arrests – a major success for criminal justice reform.
2. Re-scheduling
The Biden administration called for an expedited review of cannabis scheduling from the FDA and other agencies in 2022. We could see cannabis removed from Schedule One and placed in Schedule Three or lower or de-scheduled altogether. This would have massive positive implications for the future of the cannabis industry and the prospects for comprehensive cannabis reform at the federal level. Fingers crossed for de-scheduling.
3. More states liberalizing
2023 should see new states across the US move to legalize cannabis for adults. Minnesota’s state legislature has already advanced cannabis legislation, and major pushes for reform are being undertaken in Pennsylvania, Ohio, Hawaii, and elsewhere. Oklahoma voters will get to vote on cannabis legalization in March.
4. New state markets
New markets continue to come online and mature. Montana posted healthy sales in its first year. Missouri’s adult rec market will be online shortly. New York’s glacial opening should speed up in the second half of 2023, and don’t forget about Maryland and Connecticut sales coming online this year.
5. 280E relief
Last but certainly not least is 280E relief. We’ve seen it expand as a popular policy at the state level providing welcome relief to highly taxed cannabis businesses. Its annulment at the federal level would boost net revenue by 30% or more. If cannabis is re-scheduled to Schedule 3 or de-scheduled this year, entirely 280E would disappear.
Bonus Optimism: Getting to watch New Jersey, New York, and Connecticut brag about who has the best cannabis industry on Twitter.
Editors’ Note: This is an excerpt from our Monthly Playbook. If you would like to read the full monthly playbook and join the thousands of others you can sign up below.
