Cannabis Industry 2023: 3 Trends to Watch Out For – Cannabis | weed | marijuana
What will the cannabis industry look like in 2023? Mergers, acquisitions, branding and the entourage effect, according to Charlie Bowman, HEXO President and CEO.
HEXO is an award-winning cannabis brand with a solid reputation among Canadian consumers. After acquiring their competitor Redecan, they became the number-one cannabis company in Canada in the third quarter of 2021.
Since then, the company has been busy building its brand and nurturing its loyal customer base. Your President and CEO, Charlie Bowman, was able to take some time out and talk to me on the phone last week.
What’s in store for the cannabis industry in 2023? Here are Charlie’s insights.
3 – Mergers and Acquisitions
Charlie Bowman, President and CEO of HEXO
The cannabis industry may need to rein in some of its excesses in 2023. Especially in Canada, where investors have thrown in a lot of money, but “it’s underperformed.”
“We’ve had massive mergers,” says Charlie. HEXO isn’t the only cannabis company that has “had to shrink the business to make it profitable.”
Charlie says they had to “get it to the point where every sale is a good sale and then build the business back up. And we are not alone, there are other companies going through this transformation.”
“Strengthening the balance sheet is probably the most important thing,” he says. “Ensuring that operations are cash flow positive is the next key element that you will see more of.”
But HEXO’s CEO expects more mergers and acquisitions in 2023.
“I’d be shocked if you don’t see some mergers happening here. Some people are really great at growth, others are phenomenal on the medical side, some have incredible distribution and reach the market through their networks and retail. I think you’re going to see more and more of these mergers coming together.”
2 – 2023 Cannabis Branding
When it comes to the cannabis industry in 2023, particularly Canada’s cannabis industry, the question always leads back to branding.
HEXO is no stranger to Canada’s anti-marketing laws. Mike Tyson and his team turned to HEXO to work together. And while the relationship was positive, HEXO had to rebrand its Tyson products north of the 49th.
Despite the drama surrounding the rejection of Mike Tyson’s cannabis brand by Canadian regulators, the reality is less sensational. When HEXO applied to bring these products to Canada, they submitted them under the “T20” brand.
“You can’t approach your brand, your markets, and the burdens you bring with you with a cookie cutter,” says Charlie. He mentioned that certain products sell better in BC than Ontario. And that Quebec is a tough market to break into.
“I think you’re going to see branded companies in 2023,” says Charlie. On top of that, making your mark and making your mark in the Canadian cannabis market is not impossible.
“You see the boutique growing now,” he says. “It has to be sustainable. You can’t just throw money on it and expect to get a great product. You have to really understand agroscience.”
1 – Higher THC compared to the entourage effect
If the 2021-22 race was about getting THC as high as possible, then the 2023 race will be about smaller cannabinoids.
“I think the consumer has gone from ‘oh it’s marijuana, it’s legal’ to now that I see the benefits and opportunities that I’m taking the product. And that’s probably the most exciting part,” says Charlie. “We’re having conversations now about the entourage effect, the role of terpenes, the role of smaller cannabinoids. It’s not just about THC and CBD.”
Charlie sees the cannabis industry going in this direction in 2023. He says “they will always remain a market” that wants a lot of THC. “But you’ll see the larger market come in, where you’ll see certain terpenes, certain profiles, the entourage effect, and you’ll see the THC go down but the total cannabinoid count is still pretty high,” says Charlie .
Charlie says that by 2023, more cannabis users will realize that higher THC levels aren’t exactly what they want.
As this hypothetical user, Charlie says, “I’ve actually experienced better relaxation, serenity, and pain control when I start looking at the whole cannabinoid and not just THC as a single substance. And I’m starting to see certain terpenes that I like better, I like the smell, I like the aroma, I like the way they make me feel.”
“I think you’ll see that in 2023,” says Charlie. A better informed cannabis user.
The companies that excel will also be the ones “that can grow and scale effectively, and the companies that can grow in boutique environments and maintain those craft principles.”
Final word on the cannabis industry in 2023
What will the cannabis industry look like in 2023? For Charlie, if we want to look into the future, it helps to look into the past.
“Four and a half years ago this was an illegal market and now it’s legal,” he says. “Canada was the first country in the world to take the stage. There are areas where we can improve, but look at what has happened in just four and a half years. It was an amazing transformation. I think people forget that sometimes because they get frustrated with everyday life without stepping back and looking at the amazing big picture that happened.”
“We are at the forefront of an emerging industry that will be global. And Canada is still in the spotlight. That was impossible five years ago.”
However, the trend towards mergers and acquisitions is likely to continue for the foreseeable future. Consumers are becoming more conscious of what they like and don’t like, and brands will reflect those choices.
In other words, the cannabis industry by 2023 will be a mature market where terpenes and flavonoids take precedence over THC concentrations. But where eventually corporate mergers continue unabated.