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An optimistic view of the US cannabis market

Hero Technologies presented a positive outlook for the legal cannabis market in the US.

Hero Technologies' CEO, Gina Serkasevich, noted, "According to the research firm BDSA, legal cannabis sales in the US will reach $27 billion by the end of 2022, and an average compound annual growth rate of about 15% is expected for the rest of the decade."

In Michigan, where the company is in the process of establishing cannabis growing, processing, and distribution operations, the cannabis market has surged 27% in the past year. According to the Michigan Marijuana Regulatory Agency, legal cannabis sales in the state should approach $2.3 billion in 2022, up from $1.8 billion in 2021. This rapid growth has been driven by adult use, which has generated 88% of the state's year-to-date cannabis revenue. The company's subsidiary, BlackBox Systems and Technologies has pre-qualification approval in Michigan to produce and market cannabis for both adult use and medicinal use.

"The broad US cannabis market has strong growth prospects, not just because of organic increases in demand, but also because more states continue to legalize cannabis," said Serkasevich. Currently, 37 states, the District of Columbia, and three territories (Guam, Puerto Rico, and the US Virgin Islands) allow the medicinal use of cannabis, and 24 of those jurisdictions have also legalized adult use.

"The main obstacle to a truly national cannabis market in the US it that cannabis is still a controlled substance under federal law," continued Serkasevich. "That complicates banking and other financial services for cannabis companies looking to launch and expand their business around the country."

"Fortunately, significant winds of change are finally sweeping across the federal political landscape," added Serkasevich. "For example, President Biden has committed to pardoning prior federal offenses for simple cannabis possession, called on state governors to issue similar pardons, and asked the US Attorney General, Merrick Garland, and Secretary of Health and Human Services, Xavier Becerra, to review federal cannabis laws."

The US Congress has also made progress on legislation that would pave the way for more states to legalize cannabis across the country.

In April 2022, the US House of Representatives passed the Marijuana Opportunity Reinvestment and Expungement (MORE) Act to decriminalize cannabis by removing it from Schedule I of the Controlled Substances Act. Although the MORE Act did not pass through Senate committee review, in July 2022, the Senate introduced its own bill, the Cannabis Administration and Opportunity (CAO) Act, to accomplish similar ends.

According to one of the CAO Act's sponsors, New Jersey Senator Cory Booker, that bill will not be voted on as written, but the Senate will consider a version of another House-approved bill, the Secure and Fair Enforcement (SAFE) Banking Act.

The bipartisan SAFE Banking Act provides safe harbor to financial institutions and other entities that work with cannabis-related firms, giving them better, safer access to financial services.

In addition, in June 2022, the House introduced the Capital Lending and Investment for Marijuana Businesses (CLIMB) Act, which, like the SAFE Banking Act, seeks to enable "public or private financial capital sources for investment in and financing of" cannabis businesses. The CLIMB Act would also amend the Securities Exchange Act of 1934 to create a safe harbor for national securities exchanges to list state-legal cannabis-related businesses.

"All these developments, at both the state and national levels, give us great optimism about the future of the US cannabis market and the growth prospects for Hero Technologies," concluded Serkasevich. "We remain committed to the company's integrated 'seed-to-sale' strategy, with an initial focus on developing operations in the strong Michigan market. We look forward to reporting further to our shareholders as we make progress on our goals."

For more information:
Hero Technologies Inc. 
[email protected]  

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