There were a number of big stories in the news throughout 2019 proving the cannabis industry will continue on an upward trajectory in 2020 and beyond. From increases in business licenses historic votes in the U.S. Congress to more than two out of three American adults supporting adult-use legalization, the tides have turned for this industry in the United States.
Cannabis industry advocates believe more than a dozen states could legalize medical or recreational cannabis in 2020 either through legislation or voter ballots, and with increased access to a product that people want and need comes industry growth that could lead to the biggest year of the U.S. cannabis industry so far.
Here are five key things to watch in 2020 that will determine just how big the year could be for the industry:
1. Sales Growth
As mentioned above, increased access to products that people want and need leads directly to increased sales. Throughout 2020, we’ll continue to see more business licenses and sales, particularly in states like Illinois and Massachusetts where growth will skyrocket in 2020.
However, there is more to watch in 2020 than new states ramping up their cannabis programs. As the cannabis market continues to mature, we’ll see more mergers and acquisitions in the coming year making 2020 the year of business consolidation.
Furthermore, existing license holders will have to start focusing less on rapid scaling and more on profit maximization to secure their places in the market for the long-term. As the competitor field narrows, the importance of branding will increase exponentially.
Bottom-line, sales growth is inevitable in 2020, but only the most strategic companies will be able to convert sales growth into profits and long-term sustainability in the industry.
2. Illinois and Massachusetts
All eyes are on Illinois and Massachusetts. For both states, 2020 will be the first full year of adult-use cannabis sales, and those sales are expected to be huge. In Illinois alone, first day adult-use sales on January 1, 2020 reached nearly $3.2 million. More than 77,000 transactions were completed on that day at the state’s 37 licensed cannabis retailers.
Those numbers will continue to rise as the state issues more licenses (as many as 75 will be awarded by May 2020). You can bet lawmakers in other states are seeing those sales numbers and imagining how similar sales could impact their own states if they legalized adult-use cannabis.
3. Expanded Medical Cannabis Legalization
The U.S. is slowly creeping toward becoming a nation where every state has legalized medical cannabis, but there are still some states that have a long way to go. Still, industry advocates believe we could see multiple states legalize medical cannabis in 2020 through legislation or voter ballot.
Already, medical cannabis is on South Dakota’s November 2020 ballot. In Mississippi, activists got enough signatures to submit a medical cannabis measure for the state’s 2020 ballot. The Mississippi Secretary of State has yet to announce whether the initiative is approved for the ballot or not. Additionally, activists in Idaho and Nebraska are working to secure enough signatures to get a medical cannabis initiative on their states’ November ballots.
If all four of these states (South Dakota, Mississippi, Idaho, and Nebraska) legalize medical cannabis in 2020, that means 72% of the states in the country (plus Washington, D.C.) will have legal marijuana programs.
4. Expanded Recreational Cannabis Legalization
In 2019, 11 states plus the District of Columbia had legalized recreational cannabis, but in 2020, industry advocates believe more than a dozen more states could legalize it if proposed legislation and ballot initiatives pass.
Arizona, Arkansas, Connecticut, Florida, Missouri, Montana, New Jersey, New York, North Dakota, Ohio, Oklahoma, Rhode Island, and South Dakota are all states where cannabis could be on the ballot in 2020.
Of course, it’s also important to consider how the outcome of the 2020 Presidential election will affect the cannabis industry. Many 2020 Presidential candidates have already made their feelings toward medical and recreational cannabis clear, so depending on who wins, the adult-use market could grow even faster.
One of the biggest barriers to moving the cannabis industry forward in a meaningful way is a lack of research because cannabis is still listed as a Schedule 1 drug. That means not only do researchers face big hurdles to get studies approved, but also they can only conduct research using cannabis from a single National Institutes of Health-authorized farm at the University of Mississippi.
The cannabis at this farm is known to have very different properties from the cannabis products that patients and consumers buy at licensed dispensaries and retailers or that they grow themselves. Therefore, cannabis research results aren’t reliable because they don’t represent real-world use cases.
Even the director of the National Institutes of Health, Francis Collins, recognizes these problems. In a C-SPAN Newsmakers interview, Collins explained that marijuana research to better understand risks and benefits has been impeded by the drug’s Schedule 1 status.
Collins isn’t the only federal health official who has spoken out about the need to remove cannabis from the list of Schedule 1 drugs. Leaders from the National Institute on Drug Abuse and the Centers for Disease Control and Prevention have also called for a change in the scheduling of cannabis so much-needed research can move forward with fewer challenges.
When a market expands and gives a larger number of consumers access to a product they want and/or need, the industry will grow. That is certainly the case for the cannabis industry, and there is still a lot of room for growth.
Clearly, 2020 will be an exciting year as we watch sales, legalization, and research in the coming months. It’s very likely that 2020 could be a defining year, and the industry could look very different when the year is over than it does today.
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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. 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.