Things to Look Out For in the Cannabis Market in 2023

Cannabis business executives can expect a raft of positive trends in the new year, bringing renewed optimism and hope for the marijuana industry.

FREMONT, CA: The new year ushers in renewed excitement and hope for the marijuana market, which may experience many significant trends for cannabis business executives.

Overall, 2022 was a challenging year for the cannabis sector due to macroeconomic factors such as inflation and industry-specific challenges like overproduction and a lack of capital investment.

Soon, the marijuana market can anticipate, to mention a few:

Significant market consolidation in important sectors: After the rise during the COVID-19 pandemic lockdowns, the cannabis sector no longer appears to be as recession-resistant as it once was.

Companies in established areas for recreational activities, such as Colorado and Washington, are experiencing pricing declines.

Other markets, like Michigan and Massachusetts, which are relatively new in adult-use sales, are already saturated.

In reaction, both ancillary and plant-touching businesses are laying off workers.

Despite the cost-cutting initiatives, many enterprises will fail this year, more giant corporations will acquire licenses, and only the most cost-effective players will remain.

Mergers and acquisitions come to a standstill: M&A activity slowed substantially in 2022. This trend is likely to continue, given persistent rumors that access to money has dried up in the United States.

There was a time when MJBizDaily often reported on business transactions over $100 million. However, these are now seldom.

Even the value of last year's all-stock or mostly stock transactions has declined dramatically alongside the stock market.

It is unlikely that this tendency will reverse.

Delta-8 THC remains a saddle sore for the industry: In the past year, nearly every state-legal marijuana market enacted some form of regulation to manage delta-8 THC.

States with limited or no legal marijuana markets and those with comprehensive legislation have witnessed the proliferation of essentially unregulated delta-8 products, creating significant competition for the licensed business.

Under the 2018 Farm Bill, which authorized hemp production and hemp derivatives and extracts nationwide, cannabinoids derived from extracted CBD are legal so long as the plant they were derived from satisfied the legal definition of hemp.

Therefore, it is not a violation of the U.S. Controlled Substances Act to extract CBD from a hemp flower and subsequently manufacture CBD.

Without a change in the legislation, which is improbable, the delta-8 market will likely remain as it is, posing a significant problem for the cannabis sector.