With Rolling Stone already declaring it the “year of weed,” 2019 has a lot to live up to. By year’s end, more states are projected to have legalized cannabis than do not— so what’s that process actually going to look like?
The big picture is situated in its frame, readily visible, but the industry is in a transition phase that will shape the future of cannabis. New avenues are opening up that will rapidly alter the approach entrepreneurs will take in certain markets. Year of weed, indeed.
SOCIAL EQUITY
During the War on Drugs, an outrageously disproportionate amount of Hispanic and African-American citizens were incarcerated and unfairly targeted for cannabis-related crimes. That may not be news for many, including those who have been personally affected. What is news, however, is the initiative many legal states are taking to remedy the past, typically referred to as social equity. In essence, those who meet certain qualifications— having been incarcerated for drug crimes, living in a low income area, etc.— will be granted a dispensary license so they can participate in the booming cannabis industry. Los Angeles has 300 licenses on hold for this purpose, and similar programs are being rolled out across the nation.
It’s not going well.
By definition, social equity applicants don’t have access to the capital necessary to open and operate a dispensary. Most of the programs haven’t gotten off the ground, and there are no success stories to share as of this publish date.
A REFOCUS ON MEDICAL
Adult-use (or recreational) legalization has a considerable amount of mainstream exposure, but medical— if anything— is what will get federal legalization. As the STATES Act makes the rounds in D.C., there’s a tentative optimism about what’s next— it’s hard to imagine Trump signing anything endorsed by Democratic Senator Elizabeth Warren. However, other federal action could lead to legalizing medical or rescheduling cannabis, which would be a smart move for the president as he nears reelection.
The medicinal benefits of cannabis have already made a huge splash in the market in the form of CBD. Many on the front lines of the industry expect CBD to be the breach into mainstream market as beverage companies and big pharma alike vie to get in on the craze. In addition, much-needed research into the medicinal benefits of the plant are in motion, specifically in Israel.
Increased normalization and understanding is a powerful tool that will make more headway on the federal level than any amount of recreational legalization.
CONSOLIDATION
Some outlets have went so far as to call the wave of acquisitions in 2018 “relentless.” That pace is only going to continue in 2019. We’ve already discussed the benefits of franchising in relation to the consolidation wave here, and it’s likely to come up in most relevant discussions.
Consumers will be seeing a more centralized array of both products and stores in the future, and this year is another step toward that. Routine departures from the industry will become the norm, which is the predictable outcome for new industries. Currently, cannabis is in stages one and two of the consolidation life cycle, with some states still forming and others looking to scale growth. Simply put, there’s a lot more consolidation to come and those with a stake in cannabis should plan accordingly.
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