National Post (Latest Edition)
Momentum, scrutiny forecast for 2021
After years of cautious momentum and glimmers of growth, the U.S. cannabis industry is finally going to hit the gas pedal in 2021. Here’s a look at the trends expected to shape the year ahead.
MOMENTUM: Legal cannabis sales in the U. S. are expected to grow about 50 per cent in 2021 to exceed US$24 billion, including CBD and other cannabinoids, according to data company BDSA. While pundits have long talked about the “domino effect” — where New Jersey’s adult- use legalization prompts other high- density states like New York and Connecticut to hop on board — the industry is starting to look more like a snowball hurtling downhill, gathering speed as it goes. A larger U.S. market means more cannabis- adjacent businesses like hydroponics and software will spring up, too, giving risk- adverse institutional investors a way into the still federally- illegal sector. It also sweetens the incentive for states to legalize by showing just how much tax revenue is at stake: an estimated US$ 2 billion for U.S. states in 2021, BDSA says.
NAME RECOGNITION: A brand breakthrough seems almost inevitable for cannabis in 2021. The industry has recently drawn even more celebrities, including Jay- Z, Martha Stewart and Gwyneth Paltrow, while partnerships between with big consumer companies continued to gain steam, with cannabis drinks in particular seen as a 2021 sweet spot. Building a household name has proved challenging in a market where products can only be sold in certain states — but numbers show that’s changing, even for smaller players. In the last six months, 11 brands, not including those from multi- state operators, have reached sales of more than US$30 million, BDSA says.
CONSOLIDATION: The proliferation of brands, only a few of which can actually gain national name recognition, means a wave of consolidation is also in store. And with U. S. companies not able to access capital markets — a change they hope a Democratic administration will bring in 2021 — there should be no shortage of targets. The more mature Canadian market’s increasing competition and declining price economics is seen as motivating mid- and smallsized Canadian limited partners to consolidate.
SCRUTINY: With the industry getting so big, there’s sure to be some heightened scrutiny and increased rulemaking ahead. The U.S. Food and Drug Administration could finally issue formal regulations that will define how CBD products can be sold, for example. There’s also increasing interest in understanding how developing brains are affected by cannabis use. A recent study showed vaping of marijuana among youth remained steady in 2020 — with 8.1 per cent of eighth graders, 19.1 per cent of 10th graders and 22.1 per cent of 12th graders reporting use.