Why the Cannabis Industry is in for a Big Year in 2018
The past couple years we’ve been hearing all about the “green rush,” or cannabis’s booming legal markets. This has been profitable not only for growers and sellers but for numerous other companies, creating an entire industry that seems to be here to stay. According to MarketWatch, cannabis could become a $50 billion per year market by 2026, which is a number that should make any entrepreneur or investor sit up and pay attention.
With so many states seeing the tax revenues being produced following legalization, it’s no wonder that the pushback has been dwindling. Now, with a little bit more breathing room, startups across the United States have been looking to try and cash in, which has set the stage for 2018 to be a big year.
It’s been a few years since legalization first took place in Colorado, and I’ve compiled a few notes on the current trends in the industry. Check them out below.
One of the most impressive things about the cannabis market is how many different sectors have been spawned because of its progress. A lot of entrepreneurs have been looking to solve the infrastructural problems within the industry, and this has created new endeavors across the board. From payments and commerce to entertainment and delivery, cannabis startups are hoping to become the next big (green) unicorn.
The landscape for the emerging cannabis companies is still shifting and settling. For example, some companies are going after the regulatory and compliance market by providing legal assistance, while others have been focusing on the supply chain in making distribution easier. From a B2B perspective, this is excellent progress, and something to look out for in 2018. However, it’s the behavior of consumers that is really going to be the breadwinner.
Cannabis’s B2C market is set to dive deeper for 2018, with a much more immersive experience for its consumers. For example, 420TV is hoping to launch the first channel dedicated solely to cannabis. While other networks have dipped a toe into the financial or entertainment aspects of cannabis, 420TV is going to dive in, covering every aspect of the industry. Make no mistake, 2018 will be the year that cannabis becomes much more intertwined with the mainstream, and many early investors are helping to lay the groundwork.
A Growth in Funding
While some investors were skeptical early on, cannabis has seen significant growth in the past few years regarding venture capital and seed funding, and the naysayers are getting on board. If one looks strictly at the numbers, the industry seems well worth the risk, because, as noted by HempBizJournal, the average compound growth rate per year has hovered around 16 percent.
Several types of industries are getting funding, from infrastructure solutions like paying for your product to law enforcement products. For example, Hound Labs is creating a breathalyzer for cannabis that just raised $8.1 million. Although products like that might appear to be counter to the freedom of tokers, they’re necessary evils to make legalization possible in more stringent states. And when that happens, expect a lot of these investors to get a sizable return.
What’s Coming Next
For the cannabis industry to keep growing, there’s going to need to be a massive push for legalization. This isn’t going to be easy, especially when considering the many times cannabis laws have been passed via ballot measures, which not every state supports. With a steady push of what we’ve seen so far financially, as well as favorable polls, the laws should keep moving toward more relaxed policies. However, a lot of companies are looking to make strides no matter if or when cannabis becomes legal.
As noted by CB Insights, there has been $220 million equity financing in cannabis since 2012, and it doesn’t look to be slowing down anytime soon. This has blossomed into a number of different industries hoping to make a big splash in 2018, mainly in easing the big headaches of the industry.
Overall, the only thing that might stop the cannabis train is if the federal government starts cracking down on the companies involved. And while there’s a significant risk here, for the most part, things have been pretty calm.
What are you excited to see out of cannabis in 2018? Comment with your answers below.