It’s been said that 2020 will be the biggest year for the cannabis industry in the United States, but for that statement to hold true, the industry needs to shift its focus. In many states, markets are maturing, and we’re already seeing far-reaching effects.
With the 2020 election looming, both the cannabis and hemp industries could be poised for significant change, and without the right focus, businesses won’t survive. Let’s take a look at three critical areas of focus that should dominate business strategies in 2020 and beyond.
1. Cash Flow
Even the seemingly strongest players in the cannabis industry aren’t immune to its challenges. As 2019 came to an end, news stories brought our attention to the extent of the cash flow problems that leading cannabis companies were facing.
MedMen cut 190 employees and implemented a list of cost-cutting measures. In addition, the company planned to sell some assets to raise capital and even offered some of its own common stock to pay off vendors.
Aurora Cannabis stopped projects, put assets up for sale, and cut costs to slow down its cash flow problems. HEXO also halted projects, shut down facilities, and eliminated 200 jobs.
Tilray cut 10% of its workforce, and CannaTrust Holdings laid off 140 employees.
Managing cash flow is a problem for both large and small cannabis companies, and only those that can solve it will dominate in the long-term.
2. Quality and Safety
After the vaping crisis, there is a growing focus on quality and safety across the cannabis supply chain. This goes beyond quality assurance in manufacturing processes and the safety rules for cannabis and hemp products that the Food and Drug Administration (FDA) is expected to release at some time in the future.
To legitimize the industry and remove negative stigmas associated with cannabis, quality and safety should expand to encompass every aspect of the customer experience.
Furthermore, an increased focus on quality and safety is critical to thwart the black market. With the high taxes and compliance expenses that cannabis businesses are forced to pay, legal products will continue to cost more than illegal cannabis products. As long as people choose to buy from the black market, stigmas related to the industry will continue. It’s crucial that the industry works together to win against the black market, and 2020 is the year to prioritize it.
3. Hemp Rules
The U.S. Department of Agriculture (USDA) has approved 18 state and tribal hemp plans as of February 20, 2020 and will be reviewing dozens more. The focus in 2020 will be on ramping up hemp acreage and monitoring both approved plans and pilot plans from states that opted to continue operating under their existing pilot plans during the 2020 season.
The USDA is waiting to evaluate what happens during the 2020 season before making any alterations to its interim hemp rules. When the season ends, the USDA will accept more public comments, and then, create final rules for the country’s hemp program. Already, people are talking about restrictive testing and THC requirements as well as the Drug Enforcement Agency’s (DEA’s) role in the industry.
In order for the hemp industry to thrive after 2020, everyone should be laser-focused on what the USDA is doing.
Key Takeaways for the Cannabis Industry in 2020
Issues related to cash flow, quality, safety, and revised hemp rules will undoubtedly force some companies out of the cannabis and hemp industries within the next year or so while others take proactive measures and rise to the top. Will the top players be the same a year from now? Only time will tell.
As the industry continues to evolve, Cannabiz Media will be tracking all of the license changes in the Cannabiz Media License Database. Schedule a free demo and see how it can help your business get focused and dominate in the coming years.
Susan Gunelius, Lead Analyst for Cannabiz Media and author of Marijuana Licensing Reference Guide: 2017 Edition, is also President & CEO of KeySplash Creative, Inc., a marketing communications company offering, copywriting, content marketing, email marketing, social media marketing, and strategic branding services. She spent the first half of her 25-year career directing marketing programs for AT&T and HSBC. Today, her clients include household brands like Citigroup, Cox Communications, Intuit, and more as well as small businesses around the world. She has been working with clients in the cannabis industry since 2015. Susan has written 11 marketing-related books, including the highly popular Content Marketing for Dummies, 30-Minute Social Media Marketing, Kick-ass Copywriting in 10 Easy Steps, The Ultimate Guide to Email Marketing, and she is a popular marketing and branding keynote speaker. She is also a Certified Career Coach and Founder and Editor in Chief of Women on Business, an award-winning blog for business women. Susan holds a B.S. in marketing and an M.B.A in management and strategy.