What Happened to the Cannabis Industry in 2020: Revisiting Our Predictions

February 5, 2021

At the beginning of last year, we made predictions for the cannabis industry in 2020. Now that we are about a month into 2021, we thought it would be a good opportunity to reflect on how those predictions played out. 

Our first prediction was that there would be a decline in investment into the cannabis industry.

This prediction was based on trends from 2019 that were indicative of the larger struggle of the cannabis industry. 

Cannabis businesses have thin profit margins, due to the high costs of compliance with state regulations and licensing processes, high tax rates, and the burdens associated with federal illegality. We predicted that investors would notice the challenges associated with this industry as they came to the forefront. 

Unfortunately, this prediction did play out and was only exacerbated by the pandemic. 

However, despite the lack of investment, the cannabis industry did continue to grow this year. In California specifically, cannabis tax revenues grew by 80%. This can be attributed to the fact that many state governments, including California, deemed cannabis businesses essential. Additionally, people consumed much more cannabis while in lockdown.

We also predicted that regulators would notice the enormous negative impact that strict regulations have on the cannabis industry and that they would lighten the load. 

There was some progress made in this area, especially at the beginning of last year. There was a plan laid out to merge the 3 cannabis oversight bodies which would streamline regulations. However, this was delayed due to the coronavirus. 

There was also an improvement in regulations regarding licensing. Cannabis businesses are now required to put a QR code in their front window so customers can scan it to be sure that the business is licensed. This has empowered consumers to reduce black market cannabis consumption while increasing consumer interest in legal cannabis. All of this is a step in the right direction, but we still have a long way to go in the years ahead.

All of this is a step in the right direction, but we still have a long way to go in the years ahead.

To learn more about our predictions for 2020 and how they played out, check out Episode 013: Revisiting our 2020 Cannabis Industry Predictions.


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