8 Cannabis Industry Trends that Emerged in 2022
While the cannabis market took a dip in 2022, the forecast still shows growth in the long term.
1. Stock prices slid
The start of 2021 was hopeful for cannabis investors as President Joe Biden took office and the Democrats took control of the House of Representatives and Senate.
But then, the much anticipated SAFE Banking Act failed and caused stock prices to fall at the end of 2022.
2. Mature adult-use markets shrank
The most significant trend in the 2022 cannabis market was declining sales in the mature recreational markets. Most businesses experienced double-digit declines over the same period in 2021. With an inflated economy, this decline in sales can be related to a lack of disposable income.
3. Flower shares decreased while interest in other products grew
While cannabis flowers are still the biggest seller, shares slowly dropped in 2022. But there is an increased interest in product differentiation across the market. Research by Headset found that there was a spike in sales of other products, like pre-rolls (+12%), cannabis-infused beverages (+10%), edibles (+10%), and vapes (+5%).
4. Nearly 9 out of 10 US adults now want to legalize cannabis
In November 2022, Pew Research Center found that 88% of US adults are on board with cannabis legalization for recreational or medical use. Only 10% say it should not be legal at all. Compare this to Gallup’s survey in 1969, where only 12% of US citizens favored legal cannabis, and you can appreciate how far we have come in 44 years.
5. Half the US population can now access legalized adult-use cannabis
New Frontier Data found that 48% of the US population now lives in states having legalized adult-use access. They also found 26% of the US population lives in states where medical cannabis is legal, for a total of 74% of the US with access to some form of legalized cannabis. Only 26% of the US population lives in illegal states.
Medical cannabis is now legal in 37 US states plus Washington DC:
Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Hawaii, Illinois, Kansas, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, Utah, Vermont, Virginia, Washington, and West Virginia.
6. Time from medical to recreational has shortened
As the industry matures, the time between when a state first legalizes medical cannabis and when they legalize it is decreasing.
States are learning from one another to expedite processes and are eager to begin selling cannabis legally. According to MJ Biz Daily, California took 7,308 days from med to rec to the state’s initial sale. Massachusetts took just 1,463 days.
7. Cannabis sales are correcting
The shutdowns during the COVID-19 pandemic led to large-scale increases in cannabis sales. As shutdowns ended and people stopped spending as much time at home, sales decreased. These decreases in year-over-year sales across cannabis markets may be a market correction rather than a downturn in popularity.
An analysis of key markets by Headset uncovered that many states experienced a decline in monthly sales in 2022, but sales are up over the long term. For example, the analysis found that Oregon experienced a 20% decline in monthly sales over 2022, but sales are still up 25% over the past year. Washington experienced an increase of 17% in sales growth over the same time frame.
8. Overall growth in the market
Recent dips in the market have not stopped the overall growth of the cannabis market. 2021 and 2022 may have been grim years for cannabis, but this was predicted. What’s also predicted is rising cannabis stocks in 2023 and 2024.
Viridian’s conservative forecast for 2023 and 2024 assumes revenues will grow 25% in both years with flat margins. They also estimate US cannabis stocks will trade at EV/EBITDA multiples of 5.7x for 2023 and 4.6x for 2024.
Read our predictions for the 2023 cannabis industry.
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