What Is the Current State of the Cannabis Industry in 2022?

The cannabis industry has continued to grow nationwide at a steady clip, in both economic scale and cultural clout. But the picture can look quite varied from state to state and country to country, given the wide variation in market maturities and regulatory details.

Getting a practical snapshot of the current state of the cannabis industry requires not just the latest data, but also a certain level of intuition and nuance. So where are we at in 2022? This is the latest.

North American Cannabis Is Heating Up

At the end of 2021, the North American legal cannabis market was estimated to be worth $15.2 billion, or about 74% of the overall global market. It’s estimated to more than double in size over the next six years, with projections suggesting the market could be worth $38.2 billion by 2028. 

Increasing awareness of and access to CBD products helped drive market growth in 2021, a trend sure to continue as cannabis and the wellness industry continue to overlap. But other hemp-based, THC-free products like Delta-8 have also experienced a meteoric rise, particularly in prohibition states where hemp-derived alternatives to recreational or medical marijuana can slot through legal loopholes.

Meanwhile, all eyes are on which states could join the legal market next. New York, New Jersey, Virginia, Connecticut, and New Mexico all ended prohibition in 2021. Rhode Island made the leap to legal in May of 2022. This year could also see Missouri, Ohio, Arkansas, Pennsylvania, Florida and Mississippi either legalizing, opening formerly medical-only markets to recreational, or advancing advocacy efforts. All of this legalization effervescence is ushering in even more localized marketing for dispensaries and cannabis brands eager to distinguish, say, Massachusetts strains from California flower, or to connect Florida’s unique landscape to different cannabis flavors and effects.

Roadblocks Remain for US Cannabis Companies 

The state-by-state legalization momentum is also opening up increased discussion about interstate commerce in post-prohibition regions with multiple adjacent legal states, like New England, the Mid-Atlantic and the West Coast. The feasibility of out-of-state imports and exports hinges in large part on federal law, not only in regards to the DEA but also financial policy. 

Expect the SAFE Banking Act, which would give cannabis companies access to electronic banking networks and reduce the burden of cash-only operations, to continue to be a hot topic throughout 2022, after it stalled in the Senate in 2021. Discourse about SAFE and other aspects of the friction between legal states and federal prohibition will likely heat up as midterm elections approach, too.

Meanwhile, the national supply chain represents another factor that has impacted the cannabis industry over the past couple years, and which will continue to influence how companies structure themselves and agitate for interstate commerce. The COVID-19 pandemic affected the cannabis industry as much as any other industry struggling to get key components from Point A to Point B, whether it’s the plastic for pre-roll tubes or cannabis flower itself. 

That pain point is contributing to the vertical integration trend, which gives cannabis companies more control over their total supply chain—at least in states where vertical integration is permitted. Expect to see more legal maneuvering as cannabis companies chafe against different states’ supply chain regulations, whether they prefer stand-alone licensing or vertical integration as a response to shifting market conditions.

The Cannabis Industry Is Truly Going Global

Just two years ago, the global cannabis market was worth a whopping $20.47 billion—and that was before continued legalization efforts and the COVID-19 pandemic boosted legal markets worldwide to even greater heights. Fortune Business Insights estimates that the international cannabis market will “grow from $28.266 billion in 2021 to $197.74 billion in 2028 at a CAGR of 32.04% in the forecast period, 2021-2028.” But where is that global growth taking place?

In late 2021 it was big news that Germany put legal cannabis on the table. It’s not clear what Germany’s timeline is for joining the United States, Uruguay, Canada and Malta as some of the most populous countries worldwide to end prohibition. But it’s certainly heated up conversations about the multinational future of the cannabis market and how big the largest cannabis companies could scale. 

Elsewhere in Europe, Switzerland and the Netherlands are testing out what legal cannabis could look like in their countries, as are Luxembourg and Macedonia. “If countries like Luxembourg and Germany move forward, it could mean more” momentum for legalized cannabis in Europe, Grasslands client Laura Bianchi, founding partner of national cannabis law firm Bianchi & Brandt, told Benzinga. Meanwhile, cannabis continues to gain strength in South and Central America, where medical and recreational markets are expanding in Brazil, Mexico, Chile, Argentina, Panama and Colombia. 

Expect to See More International Exports and M+A

Low production costs and progressive regulations like those that have allowed Uruguay’s consumption lounges to flourish have helped change cannabis culture across South America. And legislation like Colombia’s decision to permit cannabis exports suggests South and Central America could become major players in the burgeoning global cannabis scene. Indeed, some South American cannabis companies are already making big international moves, like the announcement in late 2021 that Colombian firm Flora Growth would be purchasing the California-based Vessel Brand vape company. 

Flora Growth isn’t the only company to take the consolidation trend that heated up in 2021 to a global scale. Ireland’s Jazz Pharmaceuticals purchased the UK-based GW Pharmaceuticals in a major medical cannabis acquisition last year. Late in 2021, Canada’s Tilray made a move signaling it might be gearing up to make a bid for the US-based MedMen Enterprises when it purchased MedMen’s debt—though that’s a long-term play that depends on the fate of federal legalization in the US.

Want to learn more about trends in the cannabis industry? Read 10 Predictions for Cannabis Marketing Trends and Industry Evolution in 2022 or The Ultimate 2022 Cannabis Industry Roundup.

Ricardo Baca’s 2022 Cannabis Industry Trends Forecast

Ricardo Baca, a man with dark hair, holds a microphone and smiles as he makes a gesture while speaking. He is wearing a plaid shirt over a t-shirt with the Grasslands G logo on it. Behind him is a tree. The photo is black and white.

Editor’s Note: What lies ahead for cannabis? It’s a question many in the industry are asking as we hit the ground running in Q1. From old-school matters like mergers and acquisitions to emerging cannabis industry trends like delivery models that took off during the pandemic and are here to stay, there’s a lot to assess in predicting which cannabis products and services will be pivotal to business success or become a major problem.

Whether you’re keeping an eye on efforts by prohibitionists to limit THC potency in products or how the tech industry treats cannabis on digital platforms, or you’re just curious where the industry is going to go next, Grasslands founder and CEO Ricardo Baca (who was just named ADCANN’s Marketer of the Year!) has a few thoughts on “futurecasting” cannabis in 2022.

The Colorado Model Goes National

Colorado first led the global charge on determining what a regulated cannabis market looks like, and we now see iterations of the “Colorado Model” implemented throughout the world—and I’m so fortunate to have had a front-row seat to Colorado’s historic legalization rollout since my days as Editor-in-Chief for The Denver Post’s cannabis coverage.

Since adult-use sales started in 2014, Colorado cannabis has gone on to show immense profitability, corporate responsibility and worldwide leadership. The Centennial state has been projected to become the third most profitable cannabis market in the US by the end of 2022. And as we started the year, there were 17 other states and two U.S. territories that have followed in Colorado’s footsteps to adult-use legalization. 

This year, Colorado and its veteran operators will become one of the hottest markets for cannabis M&A activity in the country. Sure, out-of-state operators like Columbia Care, Curaleaf, PharmaCann and Eaze made sizable strategic moves into the Centennial State in 2021—but that will not hold a candle to what we’re about to witness in the world’s most experienced legal cannabis market in 2022.

Door-to-Door Weed Delivery

In 2022, we will see cannabis delivery in Colorado and beyond become more normalized, increasingly widespread and lucrative. With this shift, Colorado’s real-life experience will help squash the misinformation on cannabis delivery that has for years been spread by NIMBY regulators and anti-legalization law enforcement. 

Cannabis delivery is not the dangerous bogeyman they’ve made it out to be, and I’m confident this highly regulated expansion of Colorado cannabis will be quietly successful—and like nearly every other aspect of Colorado’s first-of-its-kind cannabis industry, this real-life experience will be a powerful counterargument to fear-mongering prohibitionists.

The THC Potency Problem

2022 is the year the American cannabis industry will need to take prohibitionists’ THC potency campaigns as the serious threat they are. Not only are anti-legalization forces aiming to reduce patient access to clean, tested and proven plant medicine, they’re also attempting to cripple a healthy (and immensely regulated) business environment that is already more restrictive than most other industries. 

The prohibitionists’ latest tactic of trying to implement THC-potency caps, which are becoming increasingly common from Colorado to Vermont, must be stopped—and regulators must insist on legitimate scientific data (and not fear-mongering misinformation) to guide any potential reforms ahead. When alcohol kills more than 70,000 Americans a year and the CDC tells us cannabis has never been responsible for even one death, we need to align our business environments with the reality of the substance in question.

Social Equity, Diversity and Cannabis

While the cannabis industry has made some progress on social equity and DEI issues, we are far from where we need to be. More cannabis professionals need to understand, acknowledge and act on the history of cannabis and the war on drugs that heavily swayed public opinion and promoted racist ideologies. And I hope 2022 will be the year more cannabis executives prioritize putting this knowledge and advocacy into more widespread action. 

It’s not enough to establish cannabis brands and sell products; the cannabis industry (of all industries) needs to be a more socially conscious space. Making sure that our teams, our boards, our partnerships, our vendors and our marketing campaigns are more equitable is no longer optional. Brands must adapt or risk falling to the wayside.

New York and New Jersey Adopt an Empire State of Mind

2022 will be the all-important wind-up year for two major U.S. markets that are on track to enter the cannabis sphere: New York and New Jersey. These two East Coast giants will likely open for adult-use sales in 2023, and so 2022 is an essential timeline for ensuring the success of these lynchpin markets across the board—from social equity to responsible and reasonable business regulations. 

Like so many others before them, NY and NJ will surely adopt some iteration of Colorado’s first-of-its-kind regulatory model. But it’s also their responsibility to move the conversation forward—and to learn from mistakes and missteps in Colorado, Massachusetts, California, Illinois and others, and create the more equitable and responsible cannabis industry of the future.

Big Tech Warms Up to Cannabis

Could 2022 be the year that social media and tech giants start to play nice with cannabis brands? The wheel is already starting to turn. 

Nebulous terms of use are a broken model that is no longer sustainable for this fast-growing sector, regardless of its continued unjust federal illegality. As we see other tech platforms—including Apple’s App Store, Uber and Google—become more 420-friendly, we will see the Metas of the world start to bend to the overwhelming percentage of the American adult population that believes cannabis should be legal—and therefore reasonably engaged with by Zuck and his ilk.

A More Accessible Cannabis Industry

The cannabis industry is entering a more mature stage in its development. In 2022, cannabis marketers will focus on making cannabis branding and products more accessible in every way––from ADA-compliant websites to Braille lettering on product labels to child-resistant packaging that can be opened by adults with disabilities and more. State-legal cannabis has to be ready for the federal legalization ahead, and brands not planning for that inevitability will be the brands that lose out.