When members of the cannabis industry descended upon Las Vegas last week for the biggest trade show in the business, there was something stirring in the air. It wasn’t the aroma of a freshly lit joint, but rather a sense that everything seems to be coming up roses for the industry.
Despite a global pandemic, discombobulated supply chains, ballooning inflation and an ongoing fight to legalize marijuana on a federal level, the cannabis industry in America is flourishing.
Sales hit $20 billion in 2020, are on pace to top $26 billion this year, and are projected to leapfrog to $45.9 billion in 2025, according to data from Marijuana Business Daily that were shared at the MJBizCon, the industry’s annual trade show. The nearly $46 billion in sales would make the cannabis industry larger than the craft beer industry, said Chris Walsh, chief executive officer and president of MJBizDaily.
“These are potentially conservative numbers with what we see playing out,” Walsh said during the kickoff to the three-day event.
Snowballing US sales shouldn’t come as a surprise. At this point, the majority of Americans live in a state where some form of cannabis is legal. More than two-thirds of US states have legalized medical cannabis, of those, 18 have legalized cannabis for recreational use, according to the National Conference of State Legislatures.
Indeed, the cannabis industry got a pandemic-era boost from consumers flush with stimulus money, people forced to stay home with little to do, and dispensaries in certain states being deemed essential businesses. Many states, including trailblazers like Colorado, posted record sales in 2020.
But the past 12 to 18 months show there is more to the story than a Covid bump, Walsh said. Sales continued to accelerate at a record pace in markets across the US – notably in established states, such as Colorado, Washington and Oregon, Walsh said.
“You’re seeing the next phase of a maturing industry take hold here,” Walsh told CNN Business.
Not long ago, quarter of a billion dollar deals were few and far between in this business. Now they’re happening in quick succession: The latest being e-commerce and tech firm Dutchie, which this month raised $350 million in its latest investor round.
The industry is also expanding rapidly and creating jobs, said Karson Humiston, CEO and founder of Vangst, which runs a cannabis industry-centric job recruiting site.
It’s estimated that there were 321,000 full-time jobs in the cannabis industry in 2020, up from 234,700 the year before, according to a report released earlier this year from Leafly and Whitney Economics.
“Take a look around,” Humiston said, gesturing to bustling crowds in the exposition hall. “People want to get out of their old-school, dying industry, and they want to move into cannabis. This is it. Now is the moment to get involved, because it’s never going to be this small again.”
Still, plenty of challenges and uncertainties persist.
The US Food and Drug Administration has yet to provide official guidance on how hemp-derived cannabinoids, such as CBD, can be included in commercial products; California, the nation’s biggest cannabis market, continues to see sales siphoned to a large, unregulated industry; the industry has grown less diverse over the last couple of years; and programs to address aspects, such as social equity or repairing the harms from the War on Drugs are still in their fledgling phase.
On Capitol Hill, the whispers of federal marijuana reform and legalization have grown into a clamor. But because of a lack of consensus among lawmakers and industry members, change is not on the immediate horizon, Walsh said.
Some want incremental, but necessary, steps such as banking and tax reform. Others hope to tackle legalization in one fell swoop with comprehensive legislation.
“I’m still doubtful that we’re going to see any significant federal reform next year … including in banking,” Walsh told CNN Business, referencing longstanding efforts to change federal law to allow state-legal cannabis businesses (and those that serve them) access to traditional banking services.
Because marijuana is considered a Schedule I substance, some financial institutions have been reluctant to serve the industry – leaving operators with the inability to get small business loans, pandemic relief, insurance and disaster aid. Operators flush with cash present significant safety concerns, such as theft, robberies, assaults and even murders, backers of the bill have said.
The waiting game is nothing new for the cannabis industry. Although it has been growing and expanding in leaps and bounds, its legal progress has come in inches.
“I agree that it’s an uphill slog to see federal legalization, but what we’re putting on the table is inevitability,” Steven Hawkins, CEO of the US Cannabis Council and executive director of the Marijuana Policy Project, said during a MJBizCon panel on federal legalization. “When you get to the point when half of the country has legalized for adult-use, we have now set a stage for inevitability. And that begins to change the tone and tenor in Washington.”