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MetaConsumer: Cannabis Industry Overview

Planted: An overview of the Cannabis industry from 2021, and a look at whats happening in 2022!


Against the backdrop of the pandemic, 2021 was seemingly a repeat of 2020. Groundhog Day if you will.


Now whilst that may be true outside of the industrial hemp and commercial marijuana industries, for the cannabis sector 2021 was symbolic of another landmark year.


2021 kicked off with the $7.2bn Acquisition of Epidolex maker GW Pharmaceuticals by Jazz Pharmaceuticals, which In many ways, signaled the vast M&A activities that were to come throughout the year.


We then saw the TerrAscend Corp. acquire the Gage Growth Corp for a total compensable figure that exceeded $540 million. Trulieve Cannabis Corporation acquired Harvest Health & Recreation for $2.1 billion, to create the largest marijuana company in the United States.


Tilray and Aphria merged to form the largest cannabis company in the world, in terms of revenue.


Not only were these M&A’s record-setting, but they were also demonstrative of the strength of the cannabis industry, reflecting the intersection with various industries: pharmaceutical, wellness, media, hemp, and the more generalised global supply chain.


In the United States, the political dialogue surrounding cannabis also made some positive steps. And whilst no federal legislation was passed The federal government did provide frameworks for the research of cannabinoids and other cannabis-derived compounds via the October 2021 Medical Marijuana Research Act and the Cannabidiol and Marijuana Research Expansion Act.


Two themes have driven the growth of the cannabis market during the pandemic, the growing desire among consumers for products that enhanced their health & wellness and the continued legalisation of medical and non-medical cannabis, especially in the US.


Normalisation


Public support for legalisation is high, and corporate support will follow.


According to a poll by Gallup, 2/3 of Americans support legalising cannabis, and in a survey by Pew Research Center, roughly 60% of U.S. adults say cannabis should be legal for medical and recreational use.

https://news.gallup.com/poll/356939/support-legal-marijuana-holds-record-high.aspx
U.S. Support got Legalizing Marijuana, 1969-2021 (Credit: Gallup)

Amazons’ announcement to lobby on behalf of federal cannabis reform, has shown that as well as public support, support for cannabis reform has also found its way into the board rooms – if Elon Musk’s appearance on Joe Rogan had left any doubts.


With the backing of one of the world’s largest employers and certainly of the largest in the U.S., the trend is expected to accelerate in 2022.


It wasn’t just the States making the headlines as 2021 saw the first European countries making moves towards legalising adult-use cannabis. Malta officially became the first EU state to legalise adult-use cannabis earlier this month, with Luxembourg and Germany also pledging to legalise.


Cannabis Legislation Across the World (Source: Wikipedia | DW Research as of December 17 2021)

Other European countries are also beginning to test the waters with legalisation of adult-use cannabis with the two most advanced of these being the Netherlands and Switzerland, with both countries preparing legal pilot trials.


Canna-tech


2021, displayed the rise of Cannabis Tech with companies like Dutchie, Leafly, and many others. Dutchie is illustrative of this fact, as it was able to raise $350M in 2021 to double its valuation to $3.75B in less than one year


A complex regulatory landscape and marketing restrictions present several obstacles for the cannabis industry; however, this also presents some of the biggest areas for growth.


The industry’s most potent driving force continues to be to overcome these growing pains, with made-to-measure technology that makes commercial enterprise possible in an industry where commerce isn’t as straightforward as others.


The industry has started to see the value in technology related to most aspects of the business, from inventory management and point-of-sale and delivery to CRM and marketing automation.


Take the United States as an example; due to cannabis’ status as a federally controlled substance, transaction online or using card payments to purchase cannabis is not forthright.


Point-Of-Sale (POS) solutions have enabled consumers and retailers to work around this making it possible to browse and order online but pay-in-person, which in 2021 delivered $9 billion in sales a year.


Without these tools to hand, dispensaries would be sure to miss a significant portion of their orders and have limited means by which to collect revenue.


2022 & The Road Ahead


In a report by New Frontier Data U.S. cannabis sales could rise to $57bn by 2030, and even $72bn if the 18 additional states that seem likely to legalise activate their markets.


Sales of legal cannabis products, including cannabis-derived pharmaceuticals, outside the U.S. and Canada were estimated at $1.4 billion in spending for 2021 and are forecast to grow to $2.2 billion in 2022.


International sales are expected to reach $9.5 billion by 2026, a CAGR of approximately 46% from 2021 with the bulk of that new spending being driven by Germany and Mexico, with France and the United Kingdom as other significant contributors.


The pandemic saw the drive of health and wellness into the forefront of consumer demand– as a number of cannabis derived products, such as cannabidiol (CBD), present natural, plant-based health benefits, this perfectly aligned with the health and wellness industry and saw the cannabis industry benefit as a whole.


Whether it is legislation, normalisation or growing consumer buy-in, the signs are very positive for the industry as a whole.

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