Marijuana Business Factbook 2019

vii © Copyright 2020, Marijuana Business Daily , a division of Anne Holland Ventures Inc. You may NOT copy this Factbook, or make public the data and facts contained herein, in part or in whole. For more copies or editorial permissions, contact CustomerService@MJBizDaily.com or call (720) 213-5992, ext. 1. Executive Summary A big round of applause for the marijuana industry: It has successfully navigated childhood and now stands at the doorstep of adolescence. These words were included in last year’s letter from the editor from Chris Walsh, then vice president (now CEO) of Marijuana Business Daily . The cannabis industry has since bolted across that proverbial doorstep, emerging as a lanky, acne-ridden teen. You don’t have to stretch too far to make the cannabis industry/teenager metaphor work. The hallmark characteristics of adolescence ― rapid, uneven growth; a desire for legitimacy and independence; and uncertainty about what one wants to be when they grow up ― all apply. Now occupying the awkward stage in between child and adulthood, the cannabis industry is exhibiting inconsistent signs of maturation. Consider: • The highly fragmented marijuana industry is beginning to see major, national players emerge. U.S.-based multistate operators (MSOs) ― many of which trade on the Canadian Securities Exchange (CSE) ― had a banner year in 2018, accounting for the top five raises for all companies on the CSE. Much of that capital will be deployed throughout 2019 to fund aggressive expansion plans ― putting more pressure on small to midsized cannabis businesses with fewer resources. • After years of inaction, earnest marijuana policy reform discussions at the federal level are finally happening. Bills to address issues such as banking and taxation have found bipartisan support in the U.S. House. It’s now a question of when ― not if ― federal changes around marijuana will happen. • Investments in the cannabis space from other industries ― namely, tobacco and alcohol ― reached a fever pitch in 2018. Altria Group ― owner of Marlboro maker Philip Morris USA ― and liquor giant Constellation Brands each made multibillion-dollar investments in Canadian marijuana producers, while Molson Coors Brewing formed a joint venture with another Canadian firm to develop cannabis-infused beverages. The deals are expected to spur additional investment, mergers and acquisitions across the sector. • Social equality in the cannabis space has become a much more salient issue among politicians, advocates, regulators and industry stakeholders, forcing policymakers to identify practical solutions to ensure more diversity and fairness when crafting legalization measures or risk failure. Earlier this year, an adult-use legalization bill died in the New York Legislature primarily because of its lackluster approach to social equity, while the cornerstone of a promising rec bill under consideration in Illinois involves boosting minority ownership of cannabis businesses. • The industry will generate an estimated $11 billion to $13 billion in retail sales this year, up from roughly $2 billion in 2013. But the pace of growth is slowing in some key recreational markets, including Colorado, Oregon and Washington state, and consolidation is materializing in several regions. Letter from the Editor