A look ahead at a bright future for marijuana retail in 2018
2017 saw the cannabis industry pushing further into the frontiers of science. Medical cannabis product manufacturers are coming up with an increasing number of products and delivery methods targeted at patients with very specific indications. We’ve also seen a spike in luxury cannabis brands that are commanding higher prices, as well as the growth of software and data companies that streamline industry operations and help stakeholders address inherent challenges.
In 2018, consumers will see more branded cannabis products than ever as mainstream brands and celebrities enter the market with new products. As competition increases, so should product quality and consistency. 2018 will also bring increased adoption of blockchain technology that could add much needed transparency, legitimacy, and security to the cannabis market, especially in terms the fields of payments and supply chain management.
The stigma of cannabis continues to fade thanks to education efforts at the state and local levels, a willingness of high profile figures and medical professionals to discuss cannabis’ health benefits backed by international clinical trials, as well as balanced news coverage of the industry. We believe this is a significant factor in increasing the number of medical cannabis patients, even in states that have been legal for years. From a business standpoint, new levels of standards and professionalism in the industry are helping cannabis transition from its illicit past to legitimate, pure, organic and precision-dosed products with adult labeling and childproof packaging approaching pharmaceutical industry levels. As we move into 2018, MariMed will focus on meeting patient demand for consistent product experience by further expanding distribution of its precision dosed branded products into multiple states, assisting applicants in applying for cannabis licenses in legal states, and providing ongoing managed services for five new cannabis facilities in Maryland and Massachusetts.”
From my perspective, 2017 was all about Nevada and the fruition of our legalization efforts. The legal cannabis industry has achieved revenue levels few expected, with tax dollars flowing into the state’s coffers. Further, the selection of Nevada’s own GB Sciences to manage the medical cannabis operation at Louisiana State University has the potential to significantly advance cannabis research for the betterment of the entire industry.
Other notable events in 2017:
- Senator Orin Hatch (R-Utah) and Brian Schatz (D-Hawaii) introducing Marijuana Effective Drug Study (MEDS) Act of 2017.
- Proposition 300 in Colorado. A critically important step towards a working model for regulating public consumption within state-licensed establishments.
- The Horizons Medical Marijuana Life Science ETF, the first ever Cannabis ETF launched on the Toronto Stock Exchange (TSX).
- Threats about shutting down the industry by Jeff Sessions that never materialized.
The story for 2018 will be California. Expect delays and hiccups for several months after launch in Cali. However, after they get things worked out, the revenues will grow and mission-critical tax dollars will quickly accumulate to the delight of all stakeholders. On a related note, the regulatory environment in California is going to be difficult to understand and even more difficult to enforce. Also, banking remains a top priority for everyone concerned and our expectation is that we will see innovation in this space and positive movement during 2018.
We’ve seen a fairly significant increase in the amount of capital being deployed into the cannabis industry, as well as new cannabis-centric funds having been formed. This trend will most likely continue as will an increase in the number of publicly traded entities entering the cannabis market. In 2018, the US will take a chapter out of the Canadian playbook, and we’ll see an increase in the number of US cannabis entities surpass the billion dollar valuation mark. And in 2018 those entities may be operating in California. For the first time in history, California will permit Adult-Use cannabis to be consumed, conditional on being at least 21 years old. From a population standpoint, California is larger than the seven western cannabis states combined, even larger than Canada. We’ll see tremendous revenue generated in California in 2018 from the 39 million residents and the 251 million visitors per year.
We expect to see the home grow market more than double in 2018, in the wake of new legalization measures and a shifting focus to craft quality cannabis. If we model the home grow market after home brewing, which represents ~12% of beer production, we can expect home-grown cannabis to represent nearly $3 billion of the market by 2021 – and this is likely a conservative estimate, given the financial advantages of growing your own. With the average dispensary price of an ounce of cannabis flower approaching $400 (and rising, as more and more dispensaries open in newly legalized areas and face little pricing competition), it’s easy for consumers to do the math and see the immediate payback horizon of growing their own supply. This kind of ROI is impossible to ignore and will encourage more and more users to take cannabis production into, quite literally, their own hands.
In 2017, we saw further maturation of the cannabis market and some important trends. For 2018?
- Say Goodbye to the Wild West Long unregulated or legally gray medical markets, including California, Michigan, and Montana, are finally becoming regulated. The “Wild West” that characterized the cannabis industry in the past is quickly disappearing and more transparent, accountable and regulated industry is emerging across the board.
- Flower, Pot Brownies, and Hash are in decline – Consumer and brand sophistication pushes forward, with the products initially adopted in early legal markets dropping in popularity. While initially popular in legal markets, Baked Goods are declining rapidly as dispensaries look for products with a longer shelf life and consumers look for more discreet and easily microdosed options which leads to …
- Rise of Microdosing – 2017 was the year where microdosed products emerged right and left, targeting newbies and more sophisticated consumers who want to use cannabis on a regular basis and still be able to function throughout their day. With recreational opening in California and recreational markets taking off in Nevada this trend is expected to explode in 2018.
- 2018 will also be the year of CBD.
Article By: Ethan Andersen