5 ways the cannabis industry will change in 2022
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Legal cannabis sales in the United States reached $ 37.4 billion in 2021, and growth is expected to continue in 2022. What makes this so incredible is that cannabis is not legal across the country. In fact, the industry’s sales come from just 45 million customers.
This is good news for the cannabis industry’s potential for growth in the years to come, and in 2022 we will see not only a surge in legal sales, but some other much-needed changes as well. Let’s take a closer look at five of these key changes that are set to take place over the next 12 months.
1. Slowly crawl towards normalization
The normalization of cannabis is coming – albeit very slowly. After decades of war on drugs, it will take time to educate people and convince them to think differently about cannabis. However, 68% of Americans now support adult legalization of cannabis, and 91% believe that people should have access to medicinal cannabis.
We have also seen Americans vote in large numbers to legalize cannabis for medicinal purposes and for adults. Unfortunately, we’ve also seen lawmakers ignore the will of the people and take steps to undo what voters have accomplished in terms of legalization (we’re seeing you South Dakota and Mississippi).
In other words, Americans accept cannabis far more than legislators, who are concerned about their chances of re-election. Normalization among humans is almost complete. As the cannabis markets in many states mature and lawmakers realize that supporting legalization does not mean the world around them will collapse (or they will be voted out), normalization among lawmakers will move closer to reality in 2022.
2. Legalize more new states and more local communities sign up
The cannabis industry has a dynamic as we head into 2022, and hopefully that dynamic will lead to more states legalizing cannabis and more local communities choosing to sell cannabis within their borders.
There is a very good chance that legalization of cannabis for medical or adult use will land on the ballot in 2022. Alternatively, state lawmakers can take action to move draft laws to legalize cannabis through the legislative process. More and more lawmakers are realizing that cannabis sales generate a lot of tax revenue for their states. This is an especially hot topic for them when states bordering their own legalize cannabis and residents cross the border to buy legal products. As a result, they give this tax revenue to the neighboring states.
States that cannabis industry experts are looking for in any way for adult use and / or medical legalization in 2022 include Arkansas, Delaware, Florida, Maryland, Mississippi (again), Missouri, Nebraska, New Hampshire, North Dakota, Ohio, Oklahoma, Pennsylvania, Rhode Island, South Carolina, South Dakota (again), and Wyoming.
Of course, not all of these states will legalize adult and / or medical cannabis in 2022, but some will, which will bring additional growth to the cannabis industry and better access to legal cannabis for more people.
3. Get closer to solving license holders’ tax problems
It is undisputed that high taxes make it very difficult for cannabis license holders to operate. It is also undeniable that high taxes are flowing to consumers in the form of higher prices for legal cannabis. As a result, many people continue to buy on the black market. In 2022, states will have to address these tax issues.
To put things in perspective, Illinois launched its adult cannabis market in January 2020. In 2021, the state generated nearly $ 100 million more in tax revenue from the sale of adult cannabis than from the sale of alcohol. Obviously, there is a significant imbalance.
In California, the tax problem has gotten so bad that some say the state’s legal cannabis industry is on the verge of collapse. The good news is California Governor Gavin Newsom said in early January 2022 that he supports cannabis tax reform in the state and plans to work with lawmakers to make changes that will stabilize the market. Hopefully other state lawmakers will do the same.
4. All eyes on the east coast
California still dominates the U.S. cannabis industry, but as more east coast states legalize medical cannabis and adult cannabis, they’re getting a lot of attention. Sales of legal cannabis in East Coast markets are estimated to grow to an estimated $ 6.8 billion in 2022, and that number is projected to climb to $ 11.7 billion by 2025.
As you’d expect, populous states like New Jersey and New York are getting a lot of attention and big sales forecasts. The New York legal market is expected to have combined annual sales of over $ 2.8 billion in 2025, while New Jersey is projected to have combined annual sales of $ 1.6 billion in 2025.
Looking to the east coast further south, Florida could legalize adult sales in 2022 or shortly thereafter. If so, Florida would be the second largest cannabis market in the United States (after California) with expected annual sales of $ 3.2 billion in 2025.
5. The focus is on states with significant long-term growth opportunities
Speaking of sales projections for 2025, we’re starting to see which states will offer the cannabis industry significant long-term growth opportunities. Based on Headset’s predictions, the largest cannabis markets in 2025 will be in these states:
- California: $ 7.7 billion market
- Florida: $ 3.2 billion market
- new York: $ 2.9 billion market
- Arizona: $ 2.8 billion market
- Illinois: $ 2.5 billion market
- Michigan: $ 2.4 billion market
- Colorado: $ 2.2 billion market
- Pennsylvania: $ 2.0 billion market
- Washington: $ 1.7 billion market
- Massachusetts: $ 1.7 billion market
- Ohio: $ 1.6 billion market
- New Jersey: $ 1.6 billion market
- Oregon: $ 1.4 billion market
- Virginia: $ 1.3 billion market
- Oklahoma: $ 1.3 billion market
- Nevada: $ 1.1 billion market
- Missouri: $ 1.0 billion market
Each of these 17 states is expected to have combined annual sales of more than $ 1 billion in just three years. Not far behind is Maryland with projected annual sales of $ 895 million in 2025. The bottom line is that there are great opportunities ahead of us!
Key takeaways on how the cannabis industry will change in 2022
Normalization, growth, legalization, taxes, and the east coast are just some of the most important things to see in the cannabis industry in 2022. In other words, the next 12 months will be all about adoption, accessibility, and affordability.
You can track all license changes in 2022 by subscribing to the Cannabiz Media License Database, and to stay up to date on mergers and acquisitions subscribe to Cannabiz Intelligence ™. Schedule a demo and learn how you can meet your 2022 goals when you have access to the right, reliable data.
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