The Cannabiz Media team attended MJBizCon in Las Vegas this month where we listened to a variety of insightful speaker presentations, spoke with a long list of people working in different sectors of the marijuana industry, and showed off the Cannabiz Media Database, including the new California Scorecard, to attendees who stopped by our booth in the exhibit hall.
Over 18,000 marijuana industry professionals, 110 presenters, and 678 exhibitors made appearances at MJBizCon with many people talking about the trends we’ve been seeing in the industry and what the future will look like. Following are some of those key insights related to marijuana industry trends and predictions.
2018 Looks Promising for Marijuana Legalization and Medical Marijuana Expansion
During his presentation, Marijuana Business Daily’s Chris Walsh predicted that New Jersey will be the next state to legalize recreational marijuana. With a population of 9 million (that’s 3 million more than Colorado and 2 million more than Massachusetts) and 20 million more people within a few hours of the state by car, New Jersey will play a big role in the U.S. marijuana industry. The state could reach $1 billion in market potential.
Other states that could legalize marijuana in 2018 include Rhode Island, Vermont, and Michigan. For medical marijuana, Missouri, Oklahoma, South Dakota, and Utah are the most likely to approve it in 2018.
Recreational Marijuana Sales are Going Strong in New Markets and Will Continue in 2018
Nevada rolled out its recreational marijuana program in 2017, and the market is already growing rapidly. With just 53 retail stores selling marijuana this year, retail sales reached $60 million in the first two months and are expected to reach $250-$300 million before the year ends.
However, the news isn’t as good in California, Massachusetts, or Maine. California’s market potential is $4.5-$5 billion. While sales are scheduled to begin in January 2018, there could be obstacles that make the rollout less smooth than license holders and consumers would like.
Similarly, Massachusetts, with a market potential of $650-$750 million won’t have its full recreational market up and running in 2018 as expected, but some sales might start sooner. In Maine, the program, which has a market potential of $250-$350 million, has been delayed by at least a year.
Medical Marijuana Program Implementation is Slow
Medical marijuana sales are expected to begin in Ohio, Pennsylvania, and Maryland in 2018. The marijuana market in Ohio is projected to be $200-$400 million, but sales aren’t expected to begin until fall 2018. Sales in Pennsylvania should begin during the first quarter of 2018. The state’s market potential is $150 million to $250 million. Sales are also planned to start in Maryland during the first quarter of 2018, and the state’s market potential is $125 million to $175 million.
However, despite having many other states to learn from, several states that implemented new medical marijuana programs in 2017 faced many obstacles that caused a variety of problems. For example, sales aren’t expected to start in Louisiana until 2018, and doctor participation is low. In West Virginia, sales won’t start until mid-2019 because the program implementation process is intentionally moving incredibly slowly.
Things are also moving slowly due to challenges in Florida where huge companies are emerging to meet strong patient growth. The market potential in Florida is $600-$800 million. In Arkansas (market potential $30-$60 million), program implementation is six months behind schedule, and in North Dakota (market potential $10-$20 million), implementation is between six and eight months behind schedule.
The Future of the Marijuana Industry
Despite having many other states to learn from, delays are still common among states that are developing new marijuana programs. For recreational marijuana program implementation, states in the eastern part of the United States are lagging behind faster moving states located in the western part of the country.
Based on the state of the marijuana industry in 2017, Walsh and his team believe that investors will take the marijuana industry more seriously in 2018. From January to September 2017, marijuana companies generated $1.8 billion in global capital raises, which is more than double the amount raised one year ago. In fact, cultivation and retail investments tripled to $718 million. Other areas attracting a lot of investors’ dollars are agricultural technology, infused products, and software.
Furthermore, seven-figure deals have become normal, and deals of $10 million and up are becoming more common. Of particular interest are Canadian businesses, which are landing hundreds of millions of dollars in investor capital. Walsh and his team predict a flood of investments and acquisitions will happen over the next two years, and cross-border deals and international expansion will become commonplace.
As a result, the landscape of the marijuana market is expected to continue to evolve. With many big companies winning marijuana licenses and operating businesses in multiple markets, national expansion and the growth of retail chains are expected to dominate conversations in the coming year. Other industries are also taking notice of the marijuana industry with an increasing number of intellectual property lawsuits popping up. Many of these lawsuits involved big companies.
Finally, globalization is coming, and the United States is at risk of falling significantly behind. Marijuana businesses and investors must prepare for international competition and develop long-term strategies that focus on where the license holder fits in the global marketplace. For investors, Walsh and his team point out that the U.S. market is big and filled with opportunities, but the Canadian market just might offer more diversification and stability.