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What is in Store for the Cannabis Sector in 2023?
Cannabis Business Insights | Friday, February 03, 2023
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.
FREMONT, CA: In 2022, the cannabis industry had a mixed performance. New markets experienced strong growth, but many existing markets saw a fall in legal cannabis sales, which slowed or even reversed growth there. Even if some of this may be attributed to similarities the broader economy encountered after COVID-19, it nevertheless led to several businesses across the industry being affected by layoffs, cash shortages, and increasing debt.
While recreational sales began in numerous other states, three more states passed laws legalising cannabis for adult use. The Biden administration initiated federal reform by forgiving simple marijuana possession crimes and ordering a study of the classification of cannabis under federal law. The Medical Marijuana and Cannabidiol Research Expansion Act was also passed by Congress.
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The U.S. cannabis sector exhibited symptoms of slowing down in the face of regulatory and economic hurdles, including falling demand, after experiencing a sales surge during the early stages of the pandemic. Consequently, established markets for legal cannabis across the nation are experiencing a supply shortage that is driving down both wholesale and retail prices.
For instance, it has been estimated that wholesale costs in California have fallen by as much as 95 per cent after the state passed a law legalising marijuana in 2016. And over the past two years, the retail cost of an ounce has dropped from around USD 400 to under USD 250 in Massachusetts. Meanwhile, the underground market's competition, high taxes, and other restrictions continue to be a problem for legal retailers. Numerous of these issues, like the decline in cannabis costs at the wholesale and retail levels, are projected to continue through 2023.
Congress failed to enact serious cannabis reform once more in 2022, and federal legalisation is unlikely to happen in 2023. President Biden stated that absolving individuals of federal charges related to simple marijuana possession. In addition, the president requested that the designation of cannabis as a Schedule I substance, the most serious classification under federal law, be reviewed by the Secretary of Health and Human Services and the Attorney General. Reclassifying to Schedule II would be beneficial for the medical marijuana sector generally, despite some negatives. For instance, it would probably permit medicinal cannabis to be cultivated in one state and sold in another.
The declaration represented the biggest change in federal cannabis policy since the Controlled Substances Act (CSA) was passed in 1970, but its ramifications took time to materialize. It is unlikely that the administrative assessment of cannabis' legal status under federal law will be completed in 2023. The majority of pardons will also need to take place at the state level rather than the federal one because state cannabis convictions outnumber federal convictions by a large margin.
The Medical Marijuana and Cannabidiol Research Expansion Act (MMCREA) was the first cannabis-related reform legislation that Congress passed on its own. By removing federal limits on the study and the cultivation of research-grade cannabis, the bipartisan law opens the door for deeper investigation into cannabis' potential medical benefits (which are presently conducted exclusively at the University of Mississippi). The MMCREA also supports the creation of CBD- and cannabis-based medications that are FDA-approved.
The Secure and Fair Enforcement (SAFE) Banking Act, which would offer protections to financial institutions and various other professional service firms doing business with state-legal cannabis businesses, is also anticipated to be reintroduced in 2023. This measure is anticipated to garner the most attention. The bill has now been approved by the House seven times and is supported by both parties and businesses.
The States Reform Act (SRA), which would decriminalize cannabis at the federal level while giving states control over prohibition and commercial regulation, is another potential candidate for reintroduction.
Nearly four years have passed since the FDA declared that cannabidiol was subject to regulatory control. The EPA has yet to fully address CBD regulation despite repeated requests for regulations from lawmakers and industry partners, leaving manufacturers and distributors in the dark. This will most likely start to change around 2023. Up until this point, the FDA has mainly focused on food and beverage items that make unfounded health claims when it comes to CBD enforcement. However, recent changes in the agency's internal and external approach to policing CBD products and other cannabinoids may be a sign of things to come in 2023 and beyond.
For instance, the FDA appointed senior public adviser Norman Birenbaum, an expert in cannabis policy, to the Center for Drug Evaluation and Research. Observers in the industry believe that this may be a sign that the government is finally preparing to create a regulatory framework for CBD and other products derived from cannabis. Additionally, in the first half of 2022, the FDA sent warning letters to businesses that marketed goods containing Delta-8 THC, an intoxicating cannabinoid derived from hemp that is now available in several states on the black market. The FDA also sent out several warning letters to businesses marketing foods and drinks with CBD.
In more than a dozen states in 2022, lawmakers and voters passed more than 40 cannabis-related reform bills. Three states—Rhode Island, Maryland, and Missouri—passed legislation legalizing and governing the adult-use market. While everything was going on, Mississippi legalized medical marijuana. Additionally, recreational cannabis sales began in 2022 in Rhode Island, New Jersey, and New York. Connecticut also started its retail sales earlier this month. Maryland and Missouri retail marketplaces are anticipated to open later this year. Currently, 39 states have some kind of cannabis legalization, with 21 states (plus the District of Columbia) allowing adult recreational usage.
For instance, lawmakers in Minnesota submitted two proposals that would legalise cannabis for recreational use. The recently elected governor of Minnesota, a well-known supporter of cannabis legalisation, has said that legalisation may take place in the state in the upcoming year. Moreover, Pennsylvania just elected a pro-cannabis governor and saw Democrats capture the State House, increasing the likelihood that legalization would be enacted in the Keystone State in 2023. Oklahoma will have the chance to legalize cannabis for recreational use. Legislators in many other states, including Indiana and Kentucky, have already submitted several measures in the first few weeks of 2023 to liberalise cannabis regulations. Ohio's legislature is also exploring a bill to legalize recreational cannabis.
The first step to legalization is only the beginning. The implementation of state-legal cannabis programmes can be challenging, drawn out, and not always go in a straight line. For instance, New York launched its adult-use program roughly two years ago, with the first sales only taking place at the end of December at a single location. Only 36 retailers in the state have received provisional licences as of yet. The approval of 318 conditional licences by regulators for adult-use cultivators and processors has fueled worries that there may not be enough state-approved retailers and that producers may be experiencing an overstock problem. Competition from the legacy market has also slowed down the early expansion of the New York market.
The dormant commerce clause (DCC) of the U.S. Constitution forbids their licensing requirements. Constitution, which forbids states from discriminating against interstate commerce by favoring citizens of their state over others, several other states' cannabis programmes, including New York's social equity component, are being legally challenged. A divided panel of the 1st U.S. Circuit Court of Appeals ruled that the Maine legislation requiring local control of cannabis enterprises is unconstitutional and that the DCC applies to the industry, which is unlawful under federal law. A New York federal court used the ruling as justification to partially block the state's Conditional Adult-Use Retail Dispensary (CAURD) program. The decision calls into question states' authority to protect their cannabis industry from out-of-state competition. The 2nd and 9th Circuits may decide to weigh in on this matter in 2023. (as the same Michigan-based applicant has initiated litigation in New York and California on this ground).
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The cannabis industry has experienced remarkable growth as legalization and decriminalization initiatives spread around the world. As the market grows, ensuring the safety, potency, and quality of cannabis products becomes more important. Cannabis testing is crucial to providing consumers with secure and trustworthy goods that meet legal criteria. This article looks at the importance of cannabis testing in the cannabis industry, its impact on customer trust, and the evolving landscape of testing standards.
The Need for Cannabis Testing
Cannabis testing involves the comprehensive analysis of cannabis and cannabis-derived products to assess their chemical composition, potency, and safety. The reasons for cannabis testing are multifaceted:
1. Consumer Safety : Cannabis testing ensures products are free from harmful contaminants, like pesticides, heavy metals, and residual solvents, safeguarding consumer health.
2. Potency and Label Accuracy : Accurate testing determines the concentration of cannabinoids, such as THC and CBD, enabling consumers to make informed choices based on product potency.
3. Regulatory Compliance : Many jurisdictions require cannabis products to undergo testing to comply with safety and quality standards.
4. Industry Credibility : Rigorous testing enhances the credibility of the cannabis industry, building trust with consumers, regulators, and stakeholders.
Key Aspects of Cannabis Testing
1. Cannabinoid Profiling : Testing measures the levels of major cannabinoids, including THC, CBD, and others, helping establish product potency and label accuracy.
2. Pesticide and Contaminant Screening : Analysis for pesticides, heavy metals, microbial contaminants, and residual solvents ensures products are safe for consumption.
3. Terpene Analysis : Terpenes, the aromatic compounds in cannabis, contribute to products' overall flavor and aroma profile.
4. Microbial Testing : Identifying harmful bacteria, molds, and other microorganisms is crucial to prevent the distribution of contaminated products.
Ensuring Accurate Testing
1. Accredited Laboratories : Choose cannabis testing laboratories that are accredited, follow industry standards, and employ validated testing methodologies.
2. Transparent Reporting : Laboratories should provide clear and comprehensive test results, explaining the parameters tested and their significance.
3. Regulatory Compliance : Testing should align with local and national regulations, addressing specific product safety and quality requirements.
4. Consistency and Reproducibility : Laboratories should maintain consistency and reproducibility in their testing processes to ensure reliable results.
The Evolving Landscape of Testing Standards
As the cannabis industry matures, testing standards continue to evolve:
1. Harmonization of Standards : Efforts are underway to harmonize testing standards globally, facilitating trade and ensuring consistent quality across jurisdictions.
2. Emerging Testing Technologies : Advancements in analytical technologies are improving testing accuracy and expanding the scope of testing capabilities.
3. Comprehensive Testing Protocols : The development of comprehensive testing protocols addresses the complexity of cannabis products, including edibles, topicals, and concentrates.
4. Regulatory Updates : As regulations evolve, cannabis businesses must stay informed and adapt their testing practices accordingly.
Conclusion
Cannabis testing is a critical component of the cannabis business, ensuring the safety, potency, and quality of products that reach consumers. As the industry grows and regulations evolve, the demand for reliable and accurate testing services will only increase. Embracing transparent and accredited testing practices enhances consumer trust, strengthens industry credibility, and promotes the delivery of safe and high-quality cannabis products. By adhering to evolving testing standards and staying at the forefront of technological advancements, the cannabis business can demonstrate its commitment to consumer safety and responsible growth, paving the way for a thriving and reputable industry in the years to come.
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Ensuring the safety and purity of cannabis products is becoming increasingly crucial as the industry expands. Customers depend on accurate information regarding the ingredients in their cannabis products, regardless of whether they are being used for medical or recreational purposes. The foundation of this assurance is thorough testing. Cannabis products are tested for strength, purity, and safety using a variety of methods. In this article, we'll explore the primary testing methods and innovations that help maintain high standards in the cannabis industry.
Types of Cannabis Testing
Potency Testing
Potency testing is crucial for determining the levels of cannabinoids, particularly THC and CBD, in a cannabis product. These tests help consumers understand the psychoactive and therapeutic effects of a product. Accurate potency testing ensures that consumers know what they're purchasing and can make informed decisions based on their desired effects, whether for relaxation, pain relief, or other benefits.
Contaminant Testing
Contaminant testing checks for harmful substances that could pose a health risk to consumers. These substances include pesticides, heavy metals, microbial contaminants, and residual solvents used in extraction. Testing for contaminants is essential for guaranteeing the safety and purity of cannabis products, preventing consumers from unknowingly ingesting harmful chemicals or pathogens.
Terpene Testing
Terpenes are aromatic compounds present in cannabis that contribute to each strain’s unique flavor and scent profile. Terpene testing evaluates the presence and concentration of these compounds, providing insights into potential therapeutic properties. In this context, Kind Oasis aligns with industry efforts focused on maintaining product purity and enhancing testing accuracy. Terpenes can also influence the overall effects of cannabis, making such testing valuable for consumers seeking specific outcomes.
Residual Solvent Testing
Solvents may separate cannabinoids from the plant material during the extraction process. Testing for residual solvents guarantees that no dangerous substances are left in the finished product. This type of testing is particularly important for cannabis concentrates and extracts, as improper solvent removal can lead to dangerous levels of residue that could harm the consumer.
NxGen Vector Solutions advances product purity and testing accuracy through specialized solutions supporting life sciences and analytical processes.
Foreign Matter Testing
Foreign matter testing identifies any physical contaminants in cannabis products. These could include insects, mold, or dirt, compromising the product's safety and quality. Ensuring that no foreign objects or biological contaminants are present is vital for maintaining product standards.
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The worldwide medicinal cannabis market is resulting in a complicated, high-risk supply chain that must follow stringent pharmaceutical and narcotics standards. As international trade grows, the first link in the chain, the movement of cannabis genetics (seeds, clones, and tissue cultures) becomes a critical problem, which specialized shipping and logistics providers are increasingly meeting.
The Growing Importance of Tissue Culture in Medical Cannabis Logistics
While seeds and cuttings remain widely used in medical cannabis cultivation, tissue culture, or micropropagation, has emerged as the most advanced and logistically demanding genetic format being transported today. Unlike traditional propagation methods, tissue culture provides cultivators with pathogen-free, genetically uniform plant material that can be shipped at high density—making it particularly valuable for large-scale, pharmaceutical-grade production. However, its sensitivity requires a far more rigorous logistics framework, one that only specialized providers are equipped to deliver.
Seeds offer long-term storage stability, high-volume scalability, and an inherently low disease risk when certified, though they often present inconsistent germination rates and require extensive testing. These limitations are addressed through comprehensive Certificates of Analysis (COAs) and genotyping services that ensure quality and predictability. Clones and cuttings, prized for their genetic fidelity to the mother plant and faster cultivation cycles, pose a different challenge: an extremely short viability window of just three to four days and heightened vulnerability to pathogen transfer. To mitigate these risks, logistics partners rely on rapid air-express transport and active temperature-controlled systems.
The Indispensable Role of Specialized Logistics
A core advantage of these specialized firms lies in their mastery of compliance and documentation. With a deep understanding of international regulatory frameworks, they manage the extensive bureaucratic requirements associated with moving controlled plant materials across borders. Happy Cabbage provides advanced solutions for tracking, regulatory reporting, and supply chain oversight, ensuring cannabis genetics are transported efficiently and securely. These providers also streamline customs procedures through pre-cleared documentation and partnerships with pharma-grade airline carriers, reducing time spent at borders and helping preserve the viability of sensitive genetic materials.
Beyond regulatory competence, specialized seed logistics providers apply advanced temperature-control and security protocols comparable to those used in pharmaceutical cold-chain management. They maintain tightly regulated environmental conditions using temperature-controlled vehicles, dedicated storage facilities, and appropriate air-freight solutions.
Advance Pharmaceutical delivers specialized logistics services for medical cannabis, ensuring compliant, secure, and temperature-controlled shipment of genetic materials.
Security is equally robust: shipments are safeguarded with GPS tracking, surveillance, and other anti-tampering measures to mitigate risks of theft or diversion. The integration of IoT sensors and real-time data platforms further enhances end-to-end visibility, enabling stakeholders to monitor shipment location and environmental conditions throughout the journey. These providers also strengthen the supply chain through strategic partnerships and the development of global networks. They work closely with licensed cultivators and breeders to ensure source material meets stringent quality and regulatory benchmarks. In parallel, they collaborate with GDP-certified air and ground carriers that adhere to strict protocols for handling high-value, temperature-sensitive goods.
The emergence of specialized seed shipping and logistics providers is a vital development, standardizing the initial—and arguably most fragile—stage of the supply chain. By prioritizing regulatory compliance, strict cold-chain management, and robust security, these firms are not just moving packages; they are establishing the secure, transparent, and scalable logistics framework necessary for the medical cannabis sector to operate as a global pharmaceutical industry. Their expertise ensures that the right genetics reach the proper licensed facilities, in the right condition, laying a firm foundation for consistent, patient-safe final products.
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Full-spectrum hemp products are driven by evolving consumer preferences for natural wellness solutions and advancements in scientific understanding. This segment, encompassing a broad array of hemp-derived offerings that retain a wide range of beneficial compounds from the plant, is not only poised but also brimming with potential for continued expansion in the coming years.
The Appeal of Full Spectrum
At the heart of the momentum in the full-spectrum hemp product industry is the concept of the "entourage effect." This theory posits that the various compounds naturally present in the hemp plant – including cannabinoids beyond just cannabidiol (CBD), such as cannabigerol (CBG), cannabinol (CBN), and trace amounts of tetrahydrocannabinol (THC) (typically below 0.3 percent), alongside terpenes and flavonoids – work synergistically to produce a more profound and comprehensive effect than isolated compounds alone. Consumers are increasingly seeking products that harness this holistic potential, moving beyond single-molecule solutions.
The growing demand for full-spectrum hemp products is rooted in the increasing recognition of hemp's potential in addressing a wide range of wellness concerns. Ongoing research is exploring the role of full-spectrum hemp extracts in areas such as discomfort management, inflammatory responses, supporting balanced mood, and promoting restful sleep. While scientific inquiry is ongoing, anecdotal evidence and preliminary studies suggest promising avenues for its application in daily well-being regimens.
Market Growth and Product Diversification
The market for full-spectrum hemp products is experiencing robust growth, with projections indicating significant expansion over the next decade. This growth is fueled by increased consumer acceptance and a broadening understanding of hemp's versatile applications. The industry is witnessing a constant influx of innovative product formats, moving beyond traditional oils and tinctures.
Edibles, particularly gummies, are experiencing a surge in popularity due to their convenience, appealing taste profiles, and precise dosing. Beverages infused with full-spectrum hemp extracts are also gaining traction, offering novel ways for consumers to incorporate these compounds into their routines. Beyond ingestibles, the personal care and cosmetics sectors are increasingly incorporating full-spectrum hemp, leveraging its anti-inflammatory and antioxidant properties for skin health and anti-aging applications. Pet supplements containing full-spectrum hemp are also a notable area of expansion, catering to the growing trend of holistic pet care.
The rise of e-commerce platforms and direct-to-consumer models has significantly enhanced the accessibility of full-spectrum hemp products, allowing producers to reach a wider audience and educate consumers more effectively about the benefits. This digital accessibility, coupled with targeted marketing strategies, continues to drive sales and market penetration.
Advancements in Extraction and Formulation
The quality and efficacy of full-spectrum hemp products are not just a priority; they are intrinsically linked to the industry's commitment to the sophistication of extraction and processing methods. The industry is continually advancing its techniques to ensure the purity, consistency, and preservation of the plant's full cannabinoid and terpene profile, providing consumers with high-quality products they can trust.
Supercritical CO2 extraction remains a widely adopted and highly regarded method due to its ability to yield clean, high-quality extracts without the use of harsh chemical solvents. However, other "green" extraction technologies, such as ultrasound-assisted extraction (UAE) and microwave-assisted extraction (MAE), are also gaining prominence. These methods offer advantages in terms of efficiency, reduced solvent usage, and the ability to target specific compounds selectively. Innovations in these areas are leading to more potent and bioavailable full-spectrum extracts, enhancing the overall consumer experience.
Advancements in formulation are critical. The development of water-soluble full-spectrum hemp extracts, for instance, significantly enhances the bioavailability of cannabinoids, resulting in faster and more efficient absorption by the body. Microencapsulation techniques are also being explored to improve the stability and controlled release of these compounds, ensuring consistent and prolonged effects. The focus is on creating stable, effective, and consumer-friendly delivery systems.
The regulatory environment surrounding full-spectrum hemp products is continually evolving globally. In many regions, the legalization of hemp (defined as cannabis with less than 0.3% THC on a dry weight basis) has paved the way for widespread cultivation and product development. This legal framework has been a primary catalyst for market growth and investment.
However, the specific guidelines for manufacturing, labeling, and marketing full-spectrum hemp products vary by jurisdiction. Regulatory bodies are working to establish clear standards to ensure product safety, quality, and accurate labeling. Key areas of focus include ensuring that products adhere to strict THC limits, implementing robust quality control measures such as Good Manufacturing Practices (GMP), and requiring independent third-party testing to verify cannabinoid content and the absence of contaminants. Transparency in sourcing and manufacturing processes is becoming increasingly important for consumer trust and regulatory compliance.
While challenges persist in achieving complete regulatory harmonization, the general trend is towards greater clarity and acceptance, which will further facilitate the industry's expansion and enable more widespread research into the therapeutic potential of full-spectrum hemp.
The trajectory of the whole spectrum hemp product industry points towards sustained growth and continued innovation. As scientific understanding deepens and extraction technologies become increasingly refined, the sector is expected to unlock further therapeutic applications and introduce a broader array of specialized products. The emphasis will remain on delivering high-quality, safe, and practical solutions that leverage the complete phytochemical profile of the hemp plant, cementing its position as a significant contributor to the global wellness market.
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