June 20, 2024  ⦿  

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10 Cannabis industry trends to look out for in 2023

Cannabis industry trends for 2023 include newfound hope and excitement as the year progresses, and executives in the cannabis industry may notice a number of significant developments in the fields of international trading, shipment and production.

Future prospects for the cannabis industry include, among others: a sustained decline in mergers and acquisitions calls for moratoria in markets that are mature yet are experiencing supply problems. Retail product segmentation is becoming more and more important as consumer purchasing habits become more sophisticated.

Here are TOMORROW420’s Top 10 Cannabis Industry Trends for 2023:

1. Significant market consolidation

The cannabis industry doesn’t seem to be as recession-proof as it previously did after the boom times during the COVID-19 pandemic lockdowns. Companies in established recreational areas like Colorado and Washington State are having trouble keeping up with price declines.

Other markets that are on the younger side for adult-use sales, like Massachusetts and Michigan, have already hit saturation. As a result, both ancillary and plant-touching businesses are laying off staff. Many enterprises will still fail this year despite cost-cutting initiatives; licenses will be absorbed by larger, corporate-style businesses; and only the most cost-effective players will survive.

2. Acquisitions and mergers come to a halt in first half of year

M&A activity sharply decreased in 2022, and given continuous claims that cash is seldom available nationwide, the trend is likely to continue. There was a time when TOMORROW420 often covered business transactions valued at over $100 million. However, those are currently quite scarce.

Many of the deals we covered in 2022 were for less than $25 million. Along with the stock market, even the value of all-stock or partially stock deals reached last year has decreased dramatically.

It is unlikely that the trend will change.

3. Delta-8 THC continues to be a pain for the industry

As part of the cannabis industry trends in the previous year, nearly every state with a legal cannabis market implemented some kind of rule to control delta-8 THC.

Even in states with strong restrictions and small or nonexistent legal cannabis markets, delta-8 products proliferated almost unchecked, becoming a significant source of competition for the licensed business.

Cannabinoids manufactured from extracted CBD are legal as long as the plant from which they were made complied with the legal definition of hemp, according to the 2018 Farm Bill, which allowed hemp production across the country as well as hemp “derivatives” and “extracts”.

So, removing CBD from a hemp flower and processing it into a product is not under the U.S. Controlled Substances Act.

4. Lab shopping and THC potency obsession attract greater attention

It will now become clear why the industry is so fixated on THC potency. The potency issue has been an ongoing concern, but it truly came to the fore in 2022 when testing labs were sued for misrepresenting THC counts and state regulators from Florida to Nevada moved to punish and suspend labs for infractions.

Industry observers are hopeful that this will reduce lab shopping and improve customer knowledge of the cannabis plant’s many other beneficial components. That might therefore cause the business to refocus its attention away from cannabis content.

5. The volume of calls for moratoria rises

Some farmers in mature markets are requesting assistance from state governments as a result of price compression and over-saturation as new production capacity comes online.

Businesses in places like Colorado and Michigan are requesting that state authorities intervene and halt the issuance of new licenses. What impact these artificial market constraints will have on corporate success is yet to be determined.

Similar measures taken in Oregon a few years ago did not address the overproduction issue there.

6. At the retail store, product segmentation and consumer sophistication

As part of the leading cannabis industry trends in almost every area, flower sales will increase, but as consumers get more savvy and turn to other products like vapes, concentrates, and edibles, flower is losing market share. Regular users continue to smoke flower at the same rates while also incorporating additional form factors into their consumption patterns, not substituting it for other products.

As a stand-alone concentrate, as well as an ingredient in pre-rolls, cartridges, and edibles, live resin will remain a customer favorite extract. Live resin preferences are making the product more popular than distillate, which will lose some of its attraction while still remaining available.

According to Chicago-based cannabis analytics company Brightfield Group, new users account for only 6% of the cannabis market and don’t spend much money. Instead, regular cannabis smokers account for the majority of sales: 47% of cannabis users use the drug numerous times per day, 17% consume it once per day, and 10% consume it five times a week or more.

That pattern will continue.

7. Once recreational cannabis is legal in New York, the black market will be difficult to control

It has long been believed that ordering cannabis online and having it delivered to your New York apartment is simpler than ordering pizza.

The licensed market has its work cut out for it when you consider the entrepreneurial zeal that the state saw this year in the form of pop-up cannabis shops, unlicensed dispensaries, and vans selling cannabis out of their backdoors. The state is attempting to come up with novel ways to differentiate between legitimate and illegal cannabis businesses, but sticking a QR code on a store window probably won’t be sufficient.

Regulators will need to provide favorable business circumstances to entice consumers away from the black market.

8. Canada’s business problems could be resolved soon

With the aid of Wall Street funding, huge Canadian corporations have been selling cannabis at a loss in recent years, losing billions of dollars and undercutting rivals in the process. If Wall Street’s cheap money runs out, leaving big businesses to flounder or swim on their own, that trend might come to an end.

Canada has generated far more cannabis than it can sell on the production front. In 2023, nothing will change about it, but inventory might peak and then begin to decline. Retail establishments have begun to close in various regions, particularly in areas of urban marketplaces that are oversupplied.

Even if there may be more store openings in other sectors amid continued retail consolidation and closures, Expect a net gain in stores.

9. Efforts to unionize will continue to be successful

The cannabis sector will continue to be unionized. Given that the cannabis sector is one of the biggest in the US and is growing rapidly, organizations like the Teamsters and the United Food and Commercial Workers see it as an ideal target for their efforts.

According to labor activists in Canada, worker worries about poor pay and health and safety issues are the main reasons for strikes and unionization among cannabis retail staff. As part of the cannabis industry trends this year you should anticipate hearing more reports of disputes between employees and employers because not all cannabis businesses support union initiatives.

10. Legalization attempts are intensified after the mediocre results of 2022

The movement toward cannabis legalization met a brick wall in conservative states of the South and West, although Maryland and Missouri saw victories in the 2022 election. On the federal level, observers of the industry were optimistic about the slow but steady progress of banking reform. Although it didn’t materialize, this year will present another chance.

Of course, federal legalization is the ultimate aim, and President Joe Biden’s declaration that his government will examine whether cannabis should remain a Schedule 1 drug will encourage advocates and reformers is encouraging.

The states that did not pass legislation to legalize cannnabis in 2022 are also worth keeping an eye on. These include Delaware, Kansas, North Carolina, and South Carolina.

This was TOMORROW420 team’s Top 10 Cannabis Industry Trends for 2023. hope you enjoyed it. Don’t forget to save it for later review.

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