Review of the cannabis industry and licensing 2022

Cannabis industry talk and news in 2022 focused on several key topics, including mergers and acquisitions, legalization, banking, and the 2022 election. Many of these topics are not new. They represent problems that the legal cannabis industry has struggled with for years. However, 2022 was a year where we finally saw positive movement in a critical way.

The cannabis industry in 2022

For example, President Joe Biden signed legislation that would allow for expanded cannabis research and called for a review of marijuana rescheduling this year. Both are important steps towards expanding the industry into the future. In addition, as of the writing of this article, the SAFE Banking Act had not yet been passed. However, lawmakers are getting closer to providing some form of banking relief for cannabis companies.

There are also small steps at the federal level, and there may finally be impetus to bring about real change in the near future. An October 2022 Gallup poll found that 68% of American adults support federal cannabis legalization. In fact, the majority of American adults have supported legalization since 2016, based on the results of the annual Gallup poll.

Additionally, Gallup broke down its poll results among 35 subgroups of American adults, and the majority of respondents said they support cannabis legalization in all but two subgroups: conservatives (49% support legalization) and those who attend church at least once a week (46% are in favour). Even in these two sub-groups, almost a majority support legalization.

Given this data, it makes sense that voters in Missouri and Maryland voted to legalize cannabis in the November 2022 elections. Today, more than half of Americans live in states where adult-use cannabis is legal. That’s more than 155 million Americans in 21 states with legal marijuana.

The tides are changing and we’re definitely on our way to solving banking problems, helping license holders in trouble and legalizing. The question is, will the larger shift the industry needs happen fast enough? Only time can tell.

Cannabis licensing in 2022

In 2020, Cannabiz Media launched the Cannacurio blog post series to provide insights into cannabis licensing in the United States and international markets based on data from the Cannabiz Media License Database. There’s no better way to summarize cannabis licensing in 2022 than to delve into the data that Cannabiz Media’s co-founder and chief data officer, Ed Keating, has analyzed in his Cannacurio blog posts over the past 12 months.

Cannacurio #52, released February 2022, provided a year-end 2021 dispensary and retailer license breakdown that would provide a foundation for growth in 2022. At the time, Oklahoma had far more licenses than any other state at 2,469 — more than double the state with the next largest number of pharmacy and retail licenses, Colorado at 1,080.

In fact, Oklahoma was responsible for 26% of all pharmacy and retail licenses in the United States. Oklahoma was also the state that created the most new dispensaries and retailers through the month of 2021. The state created 29.6% of all new pharmacy and retailer licenses in 2021, well ahead of the state that ranks second — Michigan at 12.8%.

Fast forward to Cannacurio #59 in June 2022, and Oklahoma still dominated with 2,256 active stores (Colorado had 1,064 stores in second place) and 331 new active stores per month from January through May 2022. Those 331 stores accounted for 31.1% of all new active stores in the US New Mexico ranked second with 218 new active stores over the same period (20.5%).

As of the start of 2022, Oklahoma also ranked as the state with the most active cultivation licenses with 9,280 based on data published in Cannacurio #54. California came second with 8,521, followed by Oregon with 1,382. Similar to pharmacy and retail licenses, Oklahoma also added the most cultivation licenses per month in 2021 (4,093), compared to California in second place (3,023) and Michigan in third place (707).

In mid-2022, Cannacurio #60 revealed things were starting to change. California took the top spot as the state that added the most cultivation licenses between January and May 2022 (1,126). Oklahoma came in second with 1,113 new licenses and Michigan in third with 342 added cultivation licenses. However, the number of new registrations in 2022 was 25% lower than in the same period of 2021.

MSOs and M&A in 2022

Throughout 2022, mergers and acquisitions (M&A) and the rise of Multi-State Operators (MSOs) have been a hot topic. These topics have been analyzed in several Cannacurio posts over the past 12 months using data from Cannabiz Intelligence®.

Cannacurio #57 provided a look at the data to answer the question: are public MSOs building or buying their cannabis stores? In 2021, public MSOs bought 185 stores, and in the first few months of 2022 alone, public MSOs had bought 45 stores.

As might be expected, more branches were acquired in restricted license states such as in Florida. Of particular interest is the trend we are seeing of more stores changing hands each year. In 2020, 53 stores were bought and that number increased to 185 in 2021.

When it comes time to consider mergers or acquisitions, the acquiring company typically works with an M&A advisor. Cannacurio #58 sheds light on who the top advisors for cannabis M&A are.

Of the 500+ M&A transactions (including cannabis, hemp and ancillary businesses) included in Cannabiz Intelligence, lead financial advisor was Cannaccord Genuity (advising on 22 transactions) and lead legal advisor was Bennett Jones LLP (advising on 15 offerings). Cannacord has been involved in $8.1 billion in transactions and Bennet Jones advised on $6.8 billion in transactions.

Privately owned MSOs were the subject of Cannacurio #61. According to Cannabiz Intelligence data, as of September 2022, Pharacann, Parallel, and Nectar Markets, LLC are the top three private MSOs by number of facilities. Holistic Industries, Inc., which operates in 10 states, has the largest presence, followed by Pharmacann, which operates in nine states.

Interestingly, as of September 2022, private MSOs operated 187 facilities in 30 different states, with Massachusetts being the most popular. A total of 17 private MSOs had a facility in Massachusetts at the end of Q3 2022.

Key takeaways about the cannabis industry and licensing in 2022

The cannabis industry is constantly changing and Cannabiz Media will be tracking all licensing, M&A, MSO and other key dates in the Cannabiz Media License Database and Cannabiz Intelligence. Subscribe to the newsletter so you don’t miss future Cannacurio blog posts with valuable insights into what’s happening in the cannabis industry at the business and licensing level.

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