The cannabis industry is among the fastest expanding markets in the U.S. Sure; tech stocks are the hot cakes of the day. But while many investors pay attention to tech, marijuana stocks have silently surpassed all expectations. But the industry shows no signs of slowing down, and 2020 saw marijuana moving to spread its reach into other markets.
For instance, Montana, South Dakota, and New Jersey passed laws to legalize recreational cannabis. But what does this mean for the cannabis business in 2021?
The Cannabis Market In The U.S
By 2025, the cannabis market is projected to reach $30 billion in annual market value. The research behind this prediction is the New Frontier Data, and they made this estimate that cannabis is still illegal at the federal level.
Part of this market growth will be due to skillful marketing that will evolve to navigate the avalanche of regulatory restrictions that marijuana businesses have to deal with. Entrepreneurs in the cannabis landscape will depend on using a cannabis SEO service and other trendy marketing services to target the right consumers.
However, there are several other challenges that the industry needs to consider before reaching its full potential in 2021.
Challenges Facing The Cannabis Industry
The year 2021 presents new products that are likely to dominate the cannabis industry. Therapeutic and possibly revolutionary CBD-based products, edibles, vaping juices, and medications are some of the projects that might come out of development and into the market. For most of these products, the only setback will be the challenges such as:
Finding Strategic Partnerships
Despite being a challenging industry, it’s particularly difficult to succeed alone in the cannabis market. Developing a partnership during the initial stages can either make or unmake a new cannabis business.
Regulatory Changes
At this point, it’s safe to assume that regulations that govern the cannabis industry are subject to quick amendments. The industry is relatively new, and lawmakers are constantly in talks to revise or revamp laws.
Insurance, Banking, And Financing Challenges
Banking is particularly stressful for most companies in the cannabis space. This is mainly because, according to the Controlled Substance Act, the federal government still regards marijuana as an illegal Schedule I drug.
Stigma Surrounding Cannabis
The “stoner culture” associated with cannabis is to blame for the stigma that it still faces. However, cannabis consumers and patients from different walks of life rely on it both for medical and recreational purposes.
Opportunities For Growth
Since the Democratic Party led by Joe Biden won power in November last year, many in the marijuana industry breathed a sir of relief. Although ex-president Donald Trump kept a favorable approach to state-level marijuana regulation, his attorneys general were clearly anti-pot. Trump himself stirred clear of the legalization debate at the federal level.
However, one of Biden’s pledges during his campaign trail was the promise to decriminalize cannabis, making it legal at the federal level. Biden also promised to reschedule marijuana, making it a Schedule II drug instead of the Schedule I status. This shows a great promise for growth for the entire industry, and many companies wait in anticipation.
Apart from this meaningful avenue for growth, here are three other opportunities awaiting the cannabis industry in 2021.
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Arrival Of New And Improved Products
The change in regulations at the state levels meant more research and development of cannabis-derived products such as CBD edibles. As earlier mentioned, this year could be the year that some of these new products hit the market.
Not to get any false hopes because some of these products may have no meaningful impact on the entire cannabis industry. Nonetheless, a few of these could change the cannabis landscape forever. This could particularly be the case after cannabis-derived products like CBD are reschedules to Schedule II drugs.
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Better Marketing Avenues
Since the cannabis industry is relatively new, many marketers are yet to find a solid footing to understand the regulations and restrictions surrounding advertising products. Apart from this, the policies that regulate private companies also hinder how businesses in the marijuana market advertise themselves.
Presently, cannabis companies cannot advertise via television, radio, or billboards. Also, restrictions forbid pot companies from buying sponsored content as a means of advertisement. However, reforms at the federal level will be a game-changer for all companies involved in the manufacture and marketing of cannabis products. A broader reach means more customers and growth.
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Increased Profitability
Many marijuana stocks in the United States are yet to reach profitability. Innovative Industrial Properties is among some of the few pure-play cannabis stocks that have recorded recurring profitability in the cannabis industry. However, things are about to change per the estimations made by Wall Street.
According to predictions from Wall Street, several of the major publicly traded U.S multistate operators will see a change of fortunes in 2021. Some of the names included in the prediction are Cresco Labs, Green Thumb Industries, and Planet 13 Holdings.
Conclusion
Despite the rapid growth of the cannabis industry and the increasing acceptance of therapeutic CBD products, the industry still faces many hurdles. These challenges are the main roadblock preventing businesses in the cannabis market from securing investments and expanding to their potentials. Therefore entrepreneurs need to be adaptable, innovative, resourceful, and ready to revolve as legislation continues to change.
