The new year is upon us. The beginning of January always brings a sense of reflection, curiosity, and for many, hopeful anticipation about what’s possible over the next 12 months and beyond.
Cannabis professionals have experienced a real roller coaster with the industry seeing trials and tribulations in 2022 interspersed with glimmers of hope. Falling wholesale prices, widespread layoffs, and the death of the SAFE Banking Act (at least for now) led many in the space to wonder if we’ll ever catch a break.
However, 2022 wasn’t all bad news. The Biden administration in October announced plans to closely examine cannabis scheduling, offering cautious optimism that federal reform may be lurking. That same month, the DEA declared it would dramatically increase the allotment of cannabis produced for research purposes, another small step in the right direction.
In November, voters in Missouri and Maryland approved adult-use legalization. The following month, New York’s recreational market officially opened kickstarting what is likely to be one of the most significant cannabis markets in the world.
With so many ups and downs in 2022, it may be hard to know what’s next for the nascent cannabis industry.
We asked a handful of industry thought leaders to share their predictions for 2023. While many remained hesitant to predict full legalization, one thing was abundantly clear: this industry will continue to evolve and expand, slowly but surely inching toward nationwide acceptance from citizens and politicians alike.
Here’s what the experts had to say.
New York will change the game
The commencement of adult-use cannabis sales in the Empire State was big news in 2022, and all eyes are focused on the East Coast as we head into 2023. Brands from across the country are hoping to see their names on dispensary menus in New York sooner than later, thanks in part to a projected market value of over $7 billion within two short years.
It’s not just the promise of big numbers that has everyone excited about the New York market—it’s also the increased visibility and legitimization that comes along with legalization in one of the largest media markets in the world.
“I feel very confident that 2023 will be the year we finally see New York media start to embrace writing about cannabis in a different fashion,” Baca said. “We will see a significant uptick in the amount of coverage about cannabis from these New York-based publications. That will include not only the business and finance coverage that’s so essential but also the hard-hitting journalism that will be holding industry and governments accountable.”
Baca believes journalists in the global media hub of NYC will help change the narrative by covering the space more seriously, creating a ripple effect in the way the world views cannabis.
The Midwest and South are poised to ramp up
While it may be New York getting the majority of the spotlight, it’s not the only new market drumming up excitement. Many of the experts we spoke with highlighted emerging markets as ones to watch, often viewed as low-hanging fruit with new consumers and opportunities for operators and investors alike. Missouri in particular was called out several times, thanks in part to the unexpected success of the state’s medical market in 2022.
“We are optimistic about developments in the Northeast, of course, but also continuing growth in the newer markets in the Midwest,” said Roy Bingham, CEO and cofounder of cannabis data analytics firm BDSA. “There’s optimism from our market forecast team with regard to the developments in Missouri—perhaps it will actually exceed our expectations.”
There’s also growing enthusiasm about markets in the southern portion of the U.S. Florida is seeing robust growth in its medical market and has a strong chance of legalizing adult-use cannabis in 2024. Mississippi’s medical cannabis program is also already gaining steam, and political shifts throughout the region are fanning the flames of reform.
“The South is closer to legalization than some know,” said Lance Lambert, market expert and CMO of Grove Bags. “Texas and Tennessee are both just an election away from ending the failed War on Drugs.”
The canna-curious will come out to play
As more markets open and the cultural narrative around cannabis continues its shift toward normalization, the number of people trying the plant in some form will continue to increase.
According to Bethany Gomez, managing director at market insights provider Brightfield Group, just under 20 percent of Americans over the age of 21 currently identify as cannabis consumers.
Furthermore, a recent Gallup poll found 16 percent of Americans report smoking cannabis, with non-smoking consumers unaccounted for in the study likely pushing the figure higher. Thirty percent of respondents between the ages of 18 and 34 reported smoking cannabis, pointing to an increasingly strong future with a growing number of Gen Z consumers alongside a strong Millennial market. However, the number is expected to grow significantly as people in prohibition states continue to rely on hemp products.
“In 2023, we expect the hemp-derived THC market to hit $3.2 billion,” Gomez said.
Bingham also has his eye on widening market diversification, especially as brands seek to attract more nuanced consumer demographics in their fight for market share. He believes minor cannabinoids like CBN and CBG will lead the charge.
“One thing that we’re seeing across categories is the incorporation of minor cannabinoids and terpenes along with clear labeling of products to draw attention to this content,” Bingham said. “All of the top 10 gummy brands in California, for example, in the third quarter of 2022, offered at least one product with CBN or CBG.”
Current cannabis consumers will level up
It’s not just new consumers brands will want to chase in 2023. Mature consumers, who make up a significant percentage of the market, will remain key targets as their preferences and consumption habits evolve.
“In the past six months, when we survey cannabis users themselves, nearly 75 percent of them are using at least five times per week and 50 percent of those consumers are using multiple times per day,” Gomez said, adding that potency will remain a key differentiator for this segment.
“We’ve seen an explosion in infused pre-rolls, and we expect this to accelerate through next year. Retailers need to be catering to that heavy user and making sure they’re shopping through the dispensary.”
Bingham predicted premium options like terpene-rich rosin concentrates will also explode in popularity as high-end consumers seek out quality over quantity.
“Solventless products will grow rapidly, he said. “We’ve seen good growth in dabbable and vapable rosin, for example, across many markets in the last few months, and we expect that to continue.”
The battle of the brands will intensify
As more brands aim to tighten their holds in an increasingly crowded and often desperate marketplace, it’s clear that operators will do whatever it takes to reign supreme. Diversification of products isn’t enough, according to the experts we spoke with—retailers must also rethink the ways they’re engaging with their customers.
“This is the year to have retailers and cultivators partner in more creative ways to sell flower without just putting it on the shelves,” said Matthew Joseph Pasquale, owner of Alpaca Club cannabis delivery in Sacramento.
Gomez agreed, believing that demand for authenticity will drive the battle of the brands.
“I think that this year, it’s going to be a battle of branding,” she said. “Brands like Cookies come out and sweep some of the MSOs in terms of brand awareness, brand loyalty, and purchase rates in new markets that they’re entering into. I think we’re going to see a lot more disruptions from some of those more cannabis culture-focused brands who are really starting to give MSOs a run for their money.”
3 ways to jumpstart 2023
As the industry heads into a new year after a turbulent 2022, many operators are setting their own resolutions to ensure it’s smooth sailing ahead. For most, this means doing more with less and getting back to basics in order to reignite growth.
Make the most of what you have
It’s no secret cannabis companies are stretched incredibly thin, with teams and budgets reduced to bare bones. That’s why it’s more important than ever to focus on your strengths and develop new ways to be more efficient.
Think outside the box
Cannabis professionals are used to being creative, especially when it comes to brand visibility. Consider ways to attract attention that may feel more under the radar, and commit to being louder on platforms such as LinkedIn where the industry is gathering more frequently.
More brands and retailers are also teaming up to help amplify the message. Consumers love a collab, so don’t be afraid to connect with a would-be competitor—the unified front may be just what your customers want to see.
Remember the assignment
One issue plaguing operators in cannabis is trying to be too many things at once. While product diversification is necessary, brands still need to stick to their roots.
Recall why your customers were drawn to you in the first place: is it your brand story? A specific SKU that was a slam dunk? Lean into the answer, as it may help you reinvigorate your audience and win over newcomers at the same time.