• Cannabis Industry Evolves Amidst Shifts in Markets, Regulations, and Consumer Trends by 2024

  • Dec 23 2024
  • Length: 3 mins
  • Podcast

Cannabis Industry Evolves Amidst Shifts in Markets, Regulations, and Consumer Trends by 2024

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  • Summary

  • The cannabis industry continues to evolve rapidly, with significant developments in recent market movements, regulatory changes, and shifts in consumer behavior. As of 2024, the US cannabis industry is projected to exceed $32 billion in retail sales and nearly $12 billion in wholesale sales[5].

    Market movements indicate a mixed picture, with some states experiencing growth while others face decline. California, once the largest cannabis market, is expected to see a 3.4% decrease in sales, while Michigan is projected to grow by 8.6% to reach $3.32 billion in sales[1]. Maryland, which launched adult-use sales in July 2023, is on pace to join the billion-dollar sales club in 2024, with projected sales of $1.1 billion[1].

    Regulatory changes are also shaping the industry. The DEA has begun hearings on the rescheduling of cannabis, and the UK's Food Standards Agency has announced plans to approve the first CBD products by Spring 2025[5]. In California, Governor Newsom has proposed emergency regulations to ban intoxicating hemp products, which compete with the licensed cannabis market[1].

    Consumer behavior is shifting, with average retail cannabis prices dropping by 32% since 2021[3]. This price compression has led to consolidation among cannabis brands, with the top five brands increasing their market share by 14% between 2021 and 2023[3]. Dispensaries accepting debit payments earn an average of $4,627 more than cash-only retailers[3].

    Supply chain developments are also noteworthy. The number of active cultivation licenses in California has plummeted from 8,493 in 2022 to fewer than 4,950 as of mid-September 2024[1]. This decline has created opportunities for other states to grow their market share.

    Industry leaders are responding to current challenges by adapting to the changing regulatory landscape and focusing on consolidation and partnerships. Established companies from the "addiction" industries, such as alcohol and tobacco, are investing heavily in the cannabis market[2]. Small and midsize businesses are becoming the focus of most M&A activity, as the industry undergoes a correction following the pandemic-driven boom[3].

    Compared to the previous reporting period, the cannabis industry is experiencing a slowdown in growth, with some states facing decline. However, emerging markets and regulatory changes are creating new opportunities for growth and innovation. As the industry continues to evolve, it is essential for businesses to stay adaptable and responsive to changing consumer behavior and regulatory developments.
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