Annual sales data clearly demonstrates that the marijuana industry is doing very well across the country. Growth is consistent in both the recreational and medical markets. More than three-dozen states have legalized consumption in one form or another, and it seems only a matter of time before the remaining states get on board. So what does the industry have to look forward to in 2023?
By all accounts, state-legal marijuana has been nothing short of a huge success. But as with any industry, there are challenges waiting at the door. They constantly change in the marijuana industry because it is one that is still evolving. Some parts of the industry have matured; other parts are still being developed.
Utah Marijuana is a Beehive State organization that helps patients obtain medical cannabis cards. Its parent organization operates a number of clinics throughout the state. From their point of view, here are the biggest challenges facing state-legal pot as we head into 2023:
State-Federal Legal Conflicts
It looks like the ongoing conflicts between state and federal law will continue into 2023. At the start of 2022, there was quite a bit of hope that Washington would decriminalize or reschedule marijuana before summer. That obviously didn’t happen. Now it looks like there will not even be a bill ready to vote on by the end of 2022.
Maintaining Both Programs
Some 18 of the states with state-legal marijuana have both medical and recreational programs. Maintaining the two programs may get tougher in 2023 thanks to changing attitudes among consumers. The challenge can be illustrated by patients who use medical cannabis to treat chronic pain.
If those patients can buy recreational marijuana more cheaply than a comparable medical product, where is the advantage of obtaining a medical cannabis card and buying from a pharmacy? More importantly, what is the incentive to not buy even cheaper marijuana on the street?
Unfortunately, states with both types of programs are going to find it more difficult to justify their medical programs as time goes on. Things will not be nearly as difficult for states that only have medical programs.
Supply Chain Risks
Much of the discussion about marijuana, as a business venture, focuses on retail operations. But before retail comes agricultural. And whenever you are talking agriculture, you need to acknowledge supply chain risks.
Everything from weather conditions to pests and disease affect agricultural operations. Entire crops can be wiped out by a single event. Not only that, but growers also specializing in industrial hemp production need to tightly control THC content. Plants with too much THC cannot be harvested or sold. They need to be destroyed.
Banking and Insurance Problems
Although Washington is trying to come up with a bipartisan solution to the banking problem, the industry expects the problem to persist into 2023. Cannabis businesses will continue to struggle in the search for banking services. Likewise, their insurance choices will be limited.
Ongoing Liability Risks
As long as marijuana remains illegal at the federal level, cannabis businesses face a certain level of liability risk. Many operations are just one lawsuit away from going completely under. And where there is a strong enough case, federal officials could be convinced to prosecute rather than looking the other way.
None of this is to say that the marijuana industry is in jeopardy. It’s not. The industry is booming and is likely to continue doing so. But no industry is without its challenges. Those that rise to the challenges overcome and go on to thrive. That is the goal. How many will succeed in 2023 remains to be seen.