Could 2021 be the year when the legal cannabis industry really and truly becomes a bona fide sector of the US economy?
If the answer depends on whether federal legalization will eventually be achieved, the answer is still not entirely clear. There is no clear timeline, especially if the Republicans retain control of the Senate.
But that may no longer be the only factor – no more.
That's because the cannabis industry is gaining momentum. And as that continues to grow, federal legalization is becoming less of "will it happen" and more of "when it happens." But it is still a problem and has its bottlenecks when it comes to raising capital.
But let's see how it gains momentum.
One of the biggest momentum measures came just this month when the US House of Representatives passed the MORE Act, or the Marijuana Opportunity, Reinvestment and Expungement Act.
Although the Senate has yet to pass the legislation before it becomes law, it is the first time that a chamber of the United States Congress has voted to decriminalize marijuana.
Add to that the fact that the emerging Democratic government has already spoken out in support of the legal cannabis industry, and the path for the cannabis industry to grow is smoother.
In November, five more states voted to legalize cannabis at the state level. This brings the number of states that have done so to 35, with a few more to follow in 2021.
With the majority of Americans living in areas where cannabis is legal, the momentum is accelerating, because why would a state ignore the tax revenues that come with legalization and let its neighbor take advantage of it? And given the pressure on state budgets as a result of the COVID-19 crisis, it is becoming more difficult to defend resistance.
For perspective, consider Colorado, which legalized marijuana in 2014, hit a milestone. That's the year it generated $ 1 billion in tax revenue from the legal sale of marijuana.
More states legalizing the substance means the playing field is expanding, and that represents the potential for deals to move into those spaces. And momentum continues to build.
According to a report by S&P Global Market Intelligence, the pace of mergers and acquisitions in the cannabis industry is predicted to accelerate in 2021.
The report quotes:
"" It's a rapidly consolidating market, "said Nicholas Vita, Columbia Care vice president and CEO in an interview. We think mergers and acquisitions will continue at a fairly rapid pace. ""
Last fall, Columbia Care (OTC 🙂 acquired The Green Solution, a major Colorado cannabis company, in a $ 162.8 million deal, according to Market Intelligence. Columbia Care also announced a plan to purchase Los Angeles-based Project Cannabis.
Mount Global Momentum
There is also movement on a more global scale.
In December, the United Nations voted to reclassify marijuana, setting the framework for how the drug could be regulated.
While seen as a largely symbolic move, the UN's reclassification opens the door for more countries to explore the medical benefits of cannabis, and adds to the momentum.
Ultimately, although the cannabis industry in 2019 failed to deliver on its performance in 2018 that sparked investor interest, its ability to regain a foothold by the pandemic that marked much of 2020 has been combined with the political support which she still receives. , puts its outlook for 2021 in a much stronger position. Watch for companies consolidating and expanding as consumer adoption increases.
