Less than two decades ago, cannabis – in all forms – was illegal in all 50 states. Now, weighty tailwinds are propelling the industry forward. Cannabis, as a sector of the economy, is well-poised for 2021.
A large part of the momentum behind the industry is political. The Biden administration has already declared its intent to support many facets of the industry. Simultaneously, more states have moved to legalize cannabis – flexing their state rights independently of the federal government. Add to that an industry that proved its mettle and matured during a pandemic and it’s no surprise that the outlook for the cannabis industry is bright.
Here’s what I predict will unfold in 2021 to cement cannabis as one of the strongest, fastest-growing, and important sectors of the US economy.
Investments in Cannabis Companies Stabilize
After surviving a recession, driven by a once-in-a-generation global pandemic, we can now confidently say that cannabis IS recession-proof.
Cannabis investments slumped in 2020, strained by COVID-19 and the Canadian legalization letdown. Investors will return in 2021, drawn like a moth to light by the whopping 65% increase in 2020 cannabis sales across the United States.
Since the American stock exchange is still a challenge to crack due to federal prohibition, 2021 will likely see more SPAC-driven endeavors, such as Jay-Z’s deal with Caliva, come to fruition. We’ll also see the rise of steady-growth, homegrown companies like Cookies and Viola continue to blossom.
Banking Gets Closer To The Finish Line – But Doesn’t Cross It
The biggest impact on the cannabis industry in 2021 will be whether or not the SAFE Banking act passes. Banking is one of the most significant business functions for all companies – but one that the cannabis industry has lacked access to, ultimately restricting growth.
The momentum will continue in the new year, and the support is there. But unfortunately, even with the runoff in Georgia that will impact the Senate, it is doubtful that Mitch McConnel will allow this legislation to pass for political reasons despite his state, Kentucky, being well-suited to become a key player in the burgeoning hemp production industry.
As such, many banking services such as Hypur – which focus on compliance and tracking – will continue to emerge. But don’t hold your breath for landmark banking legislation to pass just yet.
A Strong, New Revenue Source
State coffers have been particularly hard-hit by the recession as spending shrunk, travel dwindled, and jobs were lost. In these bleak times, cannabis emerged as a dependable revenue stream in many states and is one that will only continue to rise in 2021 and beyond.
In 2019, the excise and state tax revenues from medical and recreational marijuana sales of the eight states that offered legal cannabis sales (California, Massachusetts, Colorado, Washington, Nevada, Oregon, Alaska, Michigan) combined to over $1.9 billion. New York State alone could earn over $1b per year in new revenues if recreational cannabis were legalized there.
These are real dollars that could contribute to state coffers nationwide, and the infrastructure to help make that happen has already begun in those early-adoption states.