Cannabis continues to grow at a record pace. As the public continues to support legalization across the country, those numbers are sure to continue in an upward trajectory.
A report from New Frontier Data expects that, from 2019 to 2025, the U.S. cannabis industry will increase by a compound annual rate of 21%. This means that growth will go from 2019’s robust tally of $13.2 billion to a whopping $41.5 billion. Cannabis will continue to be a lucrative investment opportunity.
We’ve cut through the clutter to highlight the most critical industry opportunities in the coming year. Here are the four trends that will dominate the cannabis industry in 2021.
1. Cannabis banking
Cannabis banking reform is a hot topic with industry advocates and business owners alike. While it remains to be seen what progress will be made under President Biden, he pledged on the campaign trail to federally decriminalize marijuana with a quick switcheroo, rescheduling it from a Schedule 1 to a Schedule II drug. While this wouldn’t legalize weed at the federal level, it would strip away most of the penalties linked to it.
In terms of how that affects banking is another story. The Dems have — several times now — introduced legislation that would free banks from federal penalties. The standout? The Secure and Fair Enforcement (SAFE) Banking Act, introduced in July 2019. Intended to protect financial institutions from federal prosecution, banks and credit unions would be able to offer loans, lines of credit, and checking accounts to cannabis businesses.
For many, the lack of banking access is just one more hurdle to overcome. Requiring the industry to operate primarily with cash is inconvenient, discriminatory, and reminiscent of the illicit market. We need to do better.
2. Legalize it
Most states with legalized cannabis boasted astronomical sales in 2020, and more states are predicted to approve legalization in 2021. With national news quantifying the tax revenue cannabis sales have generated for their respective states, the devil’s lettuce just got a whole lot more appealing.
New York is top on the list. The state almost legalized in 2019 and may have made it real in 2020 if not for the COVID-19 pandemic that disrupted everything. The pressure to meet budget shortfalls might just be the push recreational weed needs to become legal in the Empire State.
In Virginia, Governor Ralph Northam (D) has released a comprehensive plan to legalize adult-use marijuana. With the Dems controlling the state legislature, there’s a good chance legalization will happen in 2021.
Likewise, notable Republican-led states, including Kansas, Kentucky, South Carolina, and Alabama, might finally get medical marijuana legalized in 2021.
Pot stocks in North America will help generate profits for investors in 2021. Based on Wall Street estimates, many of the most prominent publicly-traded multistate operators (MSO) in the U.S., including Green Thumb Industries, Cresco Labs, and Planet 13 Holdings, will get out of the red and into the green land of profitability. Further north, in Canada, pot stocks are anticipated to generate profits in another year or two.
4. Bigger Players
The industry will continue to weed out the weaker companies. Those with adequate cash and infrastructure will leave those that were already barely hanging on in the dust. With wide fluctuations in cash flow, investor relations, and jockeying for industry space via mergers, the playing field will have fewer (yet more prominent) players to contend with.