At least four more states will legalize marijuana in some form in 2022 and industry mergers and acquisitions will “noticeably accelerate,” MJBiz CEO Chris Walsh predicted Wednesday.
“We’re going to see our biggest year in 2022 for M&A,” Walsh said, speaking to the general session on the first full day of MJBizCon in Las Vegas.
“That’s going to accelerate. You’re going to see some of the biggest companies coming together.”
Kicking off this year’s conference, Walsh predicted at least three or four major mergers will occur in the United States and Canada in 2022.
“It’s going to be another big year,” Walsh said.
That trend of growth and expansion likely will continue over the next several years.
Walsh pointed to a potential doubling of overall marijuana retail sales, which were around $20 billion in 2020, to $38.4 billion to $45.9 billion in 2025.
More good news on the way
In what has become an annual ritual at MJBizCon, Walsh offered a host of predictions for the coming year and an overview of the current year.
Overall, Walsh foresees another year of positive industry developments.
Growth and maturation will happen despite a lack of support from lawmakers in Washington DC, he noted.
“This train is rolling, the momentum is continuing, despite the inaction of the federal government,” Walsh said.
“It’s very clear we’re winning at the ballot box and we’re winning with state governments.”
Walsh also predicted for 2022:
- The U.S. Food and Drug Administration won’t fully pave the way for ingestible CBD, but states will lead that trend.
- There will be no federal change of marijuana laws, even on banking reform.
- A major, mature recreational market – Colorado, Washington state or Oregon – will see flat overall sales.
- There will be significant progress in social consumption regulations and the opening of cannabis lounges. If Nevada’s social lounge model proves a success, expect to see other states follow its lead.
“I do not think the FDA will pave the way for ingestible CBD next year, unfortunately,” Walsh said.
“However, I do think we will see a resurgence in CBD, fueled by states paving their own way and allowing ingestible products.”
He added that California’s new law allowing CBD in food, beverages and other products could be a “game changer.”
States to watch
Looking ahead, Walsh said the following states are “in play” for cannabis legalization.
- South Dakota (if a 2020 voter-approved ballot initiative is struck down by the courts)
- North Dakota
Wyoming could also decriminalize cannabis and legalize MMJ in the coming year, according to Walsh.
Reasons for optimism
Walsh pointed out that the industry’s business fundamentals seem sound and remained strong over the past year or more, having survived a global pandemic, a short-lived but deep recession, and a contentious presidential election.
“Despite the lockdowns and the political, social and economic unrest, the cannabis industry has prevailed – and been deemed essential,” Walsh said.
For example, many cannabis companies have been rightsized and forced to shed scores of employees during the COVID-19 pandemic.
Over the past two years, retail sales across the country continued to increase, multistate operators have gained huge traction, psychedelics are emerging as a viable business, online ordering and delivery of marijuana are taking off and Amazon has joined the cannabis conversation.
“I don’t know if Amazon getting involved in the industry is a good thing,” Walsh said. “I would say it’s probably not.”
But, he added, the company could put its sizable influence behind federal cannabis legalization.
A theme of growth emerged from Walsh’s comments, as he highlighted mature markets such as Colorado, Oregon and Washington state that are expanding and posting significant sales gains.
With that growth comes a steady dose of healthy competition, Walsh added.
“It’s frustrating when you’re dealing with it, but an industry without competition doesn’t create innovation” and instead leads to complacency, he said.
The trend of newly state-legal markets coming online also is promising. A number of those markets are on pace to reach $1 billion in sales.
With nearly a dozen states legalizing medical or recreational marijuana in recent times, those new markets could generate up to $7 billion in annual revenue once they come online.
Areas of concern
But the outlook is not all positive, Walsh said.
He cited falling cannabis prices and regulatory hurdles in California that have hampered many entrepreneurs, among other issues.
Walsh also noted political and legislative resistance in some newly legalized state programs, including South Dakota.
Another area with much room for improvement is social equity and diversity, according to Walsh. The industry is not nearly as diverse as it could be, he said.
“It’s turning into every other industry, and in some cases, it’s worse,” Walsh said. “We all can accept this, acknowledge it and work to make this a more inclusive industry.”
Aside from those challenges, Walsh sees many reasons to be bullish.
“Despite everything that’s happened, cannabis has made as much progress as I’ve seen since I’ve been in this business for the past 10½ years,” he said.
Bart Schaneman can be reached at firstname.lastname@example.org.