2022 has been a challenging year for the U.S. cannabis industry, to say the least. In the mature state markets, growers have been dealing with competition and price compression, and many are struggling to make a profit. At the same time, the industry saw some flickers of hope a couple of months ago when President Biden announced that his administration will review the federal classification of cannabis. So what can the cannabis industry expect of the new year? To get us prepared, some industry executives weigh in on their 2023 predictions.
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Modest industry growth
“I expect that the cannabis industry will experience modest growth across the U.S. in 2023, but with an uneven performance across states,” says Anthony Coniglio, CEO of NewLake Capital. “Due to the lack of capex in 2022, we are expecting supply and demand to balance and pricing to stabilize as a result. During 2023, the ability to generate or raise cash will be a major differentiator for companies operating in the sector; in the upcoming year, cash will be king. Moreover, we expect major brand adoption will be a focus as a result of the potential for sales weakness driven by elevated inflation and the staying power of weakened competition.”
Cannabis reform
So what are the expected developments as a result of President Biden’s announcement? “President Biden’s recent announcement on cannabis reform was the precursor to cannabis being reclassified from a Schedule 1 to a Schedule 2 substance,” says Sundie Seefried, CEO & President of Safe Harbor Financial. “We expect this to result in further decriminalization of cannabis, providing legal cannabis companies with greater access to lending opportunities that will allow their business to continue to grow.” Speaking of lending opportunities, Sundie expects the SAFE Banking Act to pass soon. “The SAFE Banking Act, which protects financial institutions from being prosecuted for providing banking services to the cannabis industry, will pass in some form this legislative session. However, the bill does not remove the difficulties cannabis companies have securing banking services – their greatest hurdle remains meeting Bank Secrecy Act obligations, which will continue even after Safe Plus passes,” Sundie says.
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Focus on new markets
Liesl Bernard, CEO and Founder of CannabizTeam thinks investment and commercial activity will be more focused on the new and growing markets in the Midwest and East Coast. “At the same time, California continues to work its way through the economic challenges of high debt levels, oversupply, and controlling the black market. What will likely happen is that single and multi-state operations (MSOs) will shift towards business/operations in states with lower taxation and more business-friendly regulation.” Accordingly, an Eastward migration is already happening, Liesl says. “We are already seeing a talent migration from Western States (CA, CO, OR, WA) towards the vibrant new Midwest and east Coast markets. Better capitalized MSOs and single-state operators with expanding footprints east of the Mississippi are hiring more and offering more attractive compensation packages than their West Coast counterparts. Workers making the transition range all the way from extraction techs to cultivation managers and C-suite executives.”
Accordingly, Liesl explains that it is important to not sleep on the three Ms. “Missouri, Maryland, and very likely Minnesota (via legislation expected in Q1 2023) expands the adult-use market by a remarkable 18 million people. All three states already have vibrant medical markets, so we expect an easier transition to adult use than we have seen more recently with other new adult-use markets, such as New York or Illinois, with a big spike in total sales and new jobs in each state.”
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With the easing of restrictions on federal cannabis research under the new federal medical cannabis research bill, Liesl anticipates more roles created in research, development testing, and pharmacology. “With medical cannabis now exploding internationally and especially in the EU, MSO’s are picking up the pace of their own international expansion, which will result in a wave of new international hiring for C-suite, legal, compliance, sales, branding, and marketing positions.”
When it comes to social equity programs, Liesl expects to see continued progress in the ongoing efforts to promote a diverse cannabis industry. “Several states are enacting various social equity policies. The criticisms that the legal cannabis industry is profiting from the same product that imprisoned many Americans from BIPOC communities are being heard. Illinois, New York, New Jersey, and Missouri, to name a few, have taken leadership roles providing applicants from communities that have been negatively affected by the war on drugs more opportunities to enter the legal cannabis market.”
For more information:
NewLake Capital
info@newlake.com
www.newlake.com
Safe Harbor Financial 
www.shfinancial.org
CannabizTeam 
www.cannabizteam.com