2022 promises to be a massive year for the global cannabis industry.
Noteworthy 2021 Trends 2021 was another mad rush of activity and positive developments across the industry. A few major trends from this year are:
Cannabis M&A Insanity:
Every day a massive new deal – Veridian says there has been 186 UStargeted M&A transactions through October with a record $8.3 billion in total consideration.
DTC Explodes:
Pushed by the COVID-19 pandemic, associated lockdowns, and work from home trends, Direct to Consumer (DTC) finally came to cannabis, mirroring national retail trends. Concentrated in California, major companies like Kiva Confections and Old Pal began ambitious DTC programs.
Historic Public Support:
A Gallup poll in November found record support across party lines with 68% of American adults approving of cannabis legalization
What’s Coming in 2022
MERGERS & ACQUISITIONS:
Expect Cannabis M&A to continue unabated in 2022 with more and bigger deals. If major federal reform, SAFE Banking, or full federal legalization (see Federal Reform below) happen, M&A could accelerate at an unprecedented rate.
EQUITY CROWDFUNDING:
Crowdfunding has been around since the early days of the cannabis industry but hasn’t caught on in a major way. That looks to change as more platforms come online. “Given the ongoing limitations on the ability of cannabis industry issuers to access traditional sources of capital,” says Phil Rothman, CEO of Arcview Capital LLC, “crowdfunding offers startup businesses the chance to take their opportunity directly to investors.”
Due to the uncertainty of legalization both in terms of timing and what the rules will be when it does happen, crowdfunding can provide an immediate opportunity to reach the capital markets for equity funding. “Our view is that crowdfunding in the cannabis industry will continue to expand for the foreseeable future,” Says Rothman.
Want to learn more? Check out Arcview Capital’s new equity crowdfunding platform
STATE ELECTIONS:
Several years ago, the talk among activists and industry insiders was that the ballot initiative was largely done with. Reform would have to come from state legislatures and Congress. All the states with ballot initiatives and good prospects for reform had been exhausted. 2022 shows there is still a considerable amount of reform that can happen at the ballot box.
“There are several prospects for legalization in 2022 at the state-level,” says Violet Cavendish, Communications Director at the Marijuana Policy Project (MPP). “MPP is currently focusing on legalizing and regulating cannabis via the state legislatures in Delaware, Maryland, and Rhode Island, all of which are viable to pass legalization in 2022. Missouri, Ohio, and Arkansas are states that are likely to have cannabis legalization initiatives on the ballot next year. Victories at the state-level in 2022 would increase pressure on Congress to enact federal cannabis reform.”
Medical cannabis may also be on the ballot in Wyoming and Nebraska. State legislatures are still important for cannabis to make big gains in 2022 (see Northeast Cannabis Corridor below), and keep an eye out on Kansas. The Sunflower State may just become the 38th medical cannabis state in early 2022 with the state House already approving legislation last year combined with a supportive state Senate and Governor’s office.
NORTHEAST CANNABIS CORRIDOR:
2022 will see a flurry of activity in the Northeast corridor. Legal sales could begin for new adult recreational markets in Vermont, Virginia, New Jersey, and Connecticut. New Yorkers will have highly anticipated rules and regulations set in place, and applications for licenses will begin to be accepted.
Expect a major push from state legislatures in Pennsylvania, Rhode Island, Maryland, and Delaware to create legal adult recreational cannabis markets. And you just might see legal sales to all adults begin in our nation’s capital, Washington, DC.
FEDERAL REFORM:
The final frontier of cannabis reform in the US always appears to be just within grasp but never quite happens. Will 2022 be any different? The SAFE Banking Act has the most support in DC in both chambers of Congress but looks set to not make it through the Senate.
Senate Democrat Party leadership want comprehensive legalization in the form of Charles Schumer’s Cannabis Administration and Opportunity Act rather than bringing about reform piecemeal. The votes for comprehensive reform do not appear to be there in a closely divided 50/50 Senate.
On a more positive note, Nancy Mace (R-NC) introduced a comprehensive cannabis reform bill, and it was introduced with the support of the Republican Party. The State Reform Act has little chance of passage while the Democrats control the House and Senate but further support of federal legalization by both parties is always a welcome sign.
INTERNATIONAL:
Don’t forget about the rest of the world. Reforms are taking place all the time in every corner of the globe. To highlight two areas of major reform; Mexico appears to be on the verge of legalization after coming very close in 2021. Mexico would become the largest adult recreational market in the world.
In Europe, Germany, Switzerland, and Malta are lining up to be the first countries in the EU to legalize recreational cannabis.
Editors’ Note: This is an excerpt from our Monthly Playbook. If you would like to read the full monthly playbook and join the thousands of others you can sign up below.
