What the Cannabis Industry Learned in 2021, and What to Expect in 2022
At the close of each year, the cannabis industry leaders and innovators who keep it growing examine the lessons of the previous year and anticipate how to apply these lessons for the most success in the year to come. Let’s take a look at some of the biggest trends of 2021 and what they mean for the cannabis industry in 2022.
This past year has been a recovery period for many in the cannabis industry, as businesses are caught reacting to rapid changes in the market, rather than scaling appropriately. Here are the factors that most impacted the cannabis industry in 2021 and what we learned over the past year.
Effects of COVID-19
There is no denying that the COVID-19 outbreak has affected the global economy and many individual markets as businesses strain to meet extraordinary demands. Although the economy has started to bounce back since early 2020, the effects are still being felt. Some cannabis markets and sectors did see success during COVID-19. This was especially true for dispensaries in markets where they were declared “essential businesses”. Delivery services also saw increased business during a time when consumers were limiting their time outside. However, for many businesses, the fallout from COVID-19 meant less revenue, slower supply chains, fewer available employees, and more.
Mergers and Acquisitions
Cannabis and its sister market CBD are both experiencing a fragmented market concentration with both markets still flooded with competition. However, 2021 continued to see a consolidation of the market with major players like Tilray and Trulieve concluding billion dollar acquisitions. It’s anticipated this trend of consolidation will continue in years to come as the cannabis industry sheds its fragmentation in favor of larger multi-state players. In 2022, expect even more competition and consolidation, as the top players in the cannabis space begin to carve out larger pieces of the market.
An Aging Cannabis Consumer
Cannabis companies have had to anticipate an ever-changing consumer, as the needs and the habits of the cannabis user morph. Millennials continue to make up the largest segment of the cannabis market. But the average age of the cannabis consumer is increasing. Baby Boomers are the fastest growing shopper demographic. Consumers over 55 increased their use over the past two years as they leave the workforce and take up a leisure lifestyle. The market is reacting to this trend by offering products like edibles and topicals that appeal to this older shopper.
While the crystal ball remains hazy, there are certain assumptions that industry analysts are making for the coming year.
One of the biggest aspects of legalization that has been challenging for industry insiders is the lack of places for consumers to use the cannabis they legally purchase. In tourist regions, this is especially poignant, as visitors can’t use their cannabis in hotels or in public, leaving no other options. In one of America’s largest tourist cities, this issue is near an end. Cannabis lounges are set to open in Nevada in 2022, creating a new model for cannabis legalization. If successful, onsite use of cannabis may be enacted in other legal markets throughout the U.S.
Upward market growth has been constant since the start of the legal cannabis market, and 2022 is expected to experience more of the same. The cannabis market in the U.S. was worth over $20 billion in 2020, and market researchers Mordor Intelligence predict a 13.9% CAGR over the next four years. In the event that 2020 sees new legalization at either the state or federal level, any expectations on growth will be radically increased.
Year after year, the cannabis industry expectantly hopes that national legalization will finally come to fruition, exploding market demand. In 2022, these hopes remain unchanged, even if so far unfulfilled.
What makes 2022 different? Not much. Many industry insiders don’t foresee national legalization in 2022. A Chuck Shumer spearheaded bill, the Cannabis Administration and Opportunity Act, faces an uphill battle for passage in 2022. Also stalled are bills that would add protections for banking and insurance providers working with cannabis companies.
With many potential cannabis laws bogged down in Congress, it is likely that legalization efforts will play out at the state level in 2022. Lawmakers in several states, including Delaware, Rhode Island, Maryland, Ohio, and Pennsylvania, are preparing legalization bills for 2022.
Protecting Your Company in 2022
Regardless of what 2022 will bring, you can protect your cannabis business against risk with a comprehensive insurance policy. If you don’t currently have an insurance provider, it is important that you find a partner with prior experience working with cannabis companies. They should also have the necessary knowledge of cannabis regulations to ensure your business is fully covered against potential risk. Contact CannGen here to see what coverages you need to best protect your cannabis business in 2022.
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Disclaimer: Information shared is for general purposes only.