The Cannabis Industry's Growth Potential for 2022
Published on 5/22/22
According to a recent Research and Markets report, the legal North America Cannabis Industry is estimated to reach $38.2 billion by 2028 - that's a lot of growth, considering that the industry clocked in at $16 million in 2020. With legalization on the rise, new legislation in the pipeline that could give the industry a huge financial break, and overwhelming popular support by voters nationwide, the future of cannabis looks good in North America, and the numbers back it up. Let's dive into what the future of cannabis looks like in North America over the next six years.
2022 State Legalization: Will It Pass?
As of March 2022, there are 36 states with legalized medical marijuana and 18 states with legalized recreational marijuana for adults 21 and older (South Dakota just reneged on their legalization by popular vote in November 2020). That means the vast majority of states have some form of legalized marijuana. Additionally, a Pew Research poll indicates that 60% of US adults believe medical and recreational marijuana should be federally legal; 31% believe only medical marijuana should be legalized; less than 10% believe marijuana should be fully illegal. In addition to America's increasing favor of federal legalization, Canada already made the jump and fully legalized medical and recreational cannabis nationwide in October 2018.
Looking ahead to 2022, the United States is set to continue its trend. Arkansas, Florida, Idaho, Mississippi, Missouri, North Dakota, Ohio, and Maryland are all expected to consider ballot measures on cannabis legalization. Arkansas has three campaigns pursuing legalization, and their efforts look promising. Florida looks much less promising; unless representative support changes, marijuana activists in Florida have declared they're pushing legalization efforts to 2024. Idaho has petitions for both medical and recreational marijuana legalization, and it is unclear where the state stands moving into the 2022 legislative session. Mississippi just signed its Medical Cannabis Act into law in February 2022, meaning that 2022 is a great year for Mississippi legalization but is unlikely to see such a quick turnaround to also have recreational marijuana legalized in the same year.
Missouri's chances of legalizing recreational weed in 2022 look promising, with several proposals being drafted and Republican support given early in the year. North Dakota, unfortunately, is not looking as promising as other states, with several failed initiatives over the last year. Ohio's only option is to get onto the 2022 ballot, which they are currently pursuing - it is unclear what their chances are at this moment. And in Maryland, it is looking very likely that recreational cannabis will be legalized - the House approved a legalization bill for November 2022 in February.
Cannabis Revenue: 2020 vs. 2022
Despite the turmoil and uncertainty brought on by the COVID-19 pandemic, both 2020 and 2021 were landmark years for the cannabis industry. In 2020, North America's legal cannabis market was valued at $16 billion, a more than 40% increase over 2019. It's still too soon for the numbers to be crunched and a complete evaluation of 2021, but everything is pointing to a very positive year-end figure. Thanks to considerable acquisitions in the cannabis sector, a 30% uptick in cannabis use, growth in emerging markets such as Illinois and New York, and maturation in older markets like Colorado and Oregon. 2021 was a major year for cannabis as sales eclipsed $24.5 billion, even more than Starbucks. 2022 gives the adult-use cannabis industry and medical cannabis industry a chance for 3-straight years of considerable growth. Here are some highlights that the cannabis industry is currently benefiting from:
- Loosening Regulations - the California market is expected to be given a significant tax break in the upcoming years and a federal policy that would allow banks and financial institutions to do business with a legal cannabis business.
- Increased Cannabis Use - there has been a 30% increase in general cannabis use, with special credit due to CBD, and an uptick in consumption for medical purposes.
- The 2018 Farm Bill - the continued increase of cannabis use is largely due to the federal ruling of hemp-based products as legal, and market growth continues to build in the wake of this law.
- Cannabis Opportunities - new reports reveal that over 425K full-time employees now work in the United States cannabis industry, with the number quickly rising.
- More Services - tied to loosening regulations, more cannabis services are beginning to be approved in maturing markets, such as cannabis delivery services and cannabis lounges.
Overall, based on a report by Research and Markets via PR Newswire, the North America legal cannabis business market is projected to grow to $38.2 billion by 2028. The compound annual growth rate (CAGR), which is the rate of return over a given period, is projected to be an impressive 16.6% from 2022 to 2028. With projections like this, based heavily on the highlights above, there are a lot of potential cannabis business opportunities for investors in the coming years.
What Could Prevent Cannabis Industry Growth?
Of course, these market projections are education conjecture, meaning that growth in the cannabis market is not guaranteed, however unlikely it is. Things to look out for in the coming years that might deter favorable market growth include:
- Stagnation of state-level legalization, both medical and recreational
- Cannabis regulations don't loosen as expected
- Low levels of equity are provided to communities adversely affected by the War on Drugs
- Cannabis business opportunities don't open up and investors stay away
- The black market continues to grow and legal prices get too high
Each of these could have negative effects on state markets and result in businesses being unable to keep their doors open and investors being less likely to support the industry. Fortunately, while these threats to the cannabis industry remain, everything points toward a very strong future.
The cannabis industry seems to be going nowhere but up - what do you think about the future of cannabis? Let us know in the comments below!