Cannabis ready to face 2023 after challenging 2022

2022 was a mixed bag for the cannabis industry. While new markets showed healthy growth, legal cannabis sales declined in many mature markets, slowing or even reversing growth in those markets. While some of this might be attributable to parallels experienced by the broader economy in the wake of COVID-19, it nevertheless resulted in numerous companies across the sector being hit by layoffs, cash crunches, and increased debt.

But 2022 wasn't all bad news. Three more states enacted laws legalizing adult-use cannabis, while recreational sales kicked off in several other states. On the federal level, the Biden administration took steps toward reform, pardoning federal offenses of simple marijuana possession and directing a review of cannabis's classification under federal law. Congress also enacted the Medical Marijuana and Cannabidiol Research Expansion Act.

After enjoying a sales surge during the early stages of the pandemic, the U.S. cannabis industry showed signs of slowing down in the face of regulatory and economic challenges, including declining demand. As a result, legal cannabis markets across the country, particularly mature markets, are facing a supply glut that is driving down wholesale and retail prices.

In California, for example, wholesale prices are reported to have crashed by as much as 95% since the state voted to legalize cannabis in 2016. ("How falling cannabis prices killed a 3rd generation family cannabis farm," KSBW-TV Action News 8, Monterey Hearst Television Inc., Updated Dec. 14, 2022). And in Massachusetts, the retail price of an ounce has decreased from roughly $400 to under $250 over the last two years. ("Recreational cannabis prices in Mass. plummet as dispensary owners weigh future,", Dec. 13, 2022).


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