Is Recent Cannabis Industry Growth Sustainable?
The cannabis industry, among many others, experienced a volatile 2020. There have been periods of explosive growth that parallel steep declines. California’s market, for example, is growing while other state’s markets are declining.
Because California is the largest cannabis market in the world, cannabis industry experts often watch it for patterns and trends to predict what will happen to the industry overall. But the California cannabis market still represents a smaller, targeted audience, and there are other factors at play right now.
Key Factors That Could Drive Cannabis Industry Growth
There are quite a few factors that support the statement that the cannabis market is growing. According to many cannabis industry experts, cannabis businesses are poised to bounce back from COVID-19 and will continue to grow for the following reasons:
- Recreational & medical marijuana legalization increasing access across the US
- Creative products that market to new customers (such as edibles & oils)
- Cannabis legalization is no longer politically divided, with members of both major political parties supporting cannabis reform
These key factors have been steadily increasing over recent years and have been repeatedly referenced as “proof” that the cannabis market will continue to grow.
Unique Factors Impacting The Cannabis Market In 2020
The growth we’re seeing now could be influenced by a variety of factors that are specific to 2020 (i.e. the pandemic, quarantine, a controversial presidential election, civil unrest). We are going through a unique set of unprecedented circumstances, the like of which we may never see again. This makes it nearly impossible to tell if what is happening in the cannabis market today will continue.
In addition, this growth could be a direct response to relaxed legislation. In many cases, states that legalize cannabis see a huge surge in sales which plateaus directly after. Turning again to California, the state has remained relatively stable since recreational cannabis was made available to customers two years ago. Sales jumped in July of this year, but one month of growth is far from enough evidence to support the notion that the market is rebounding.
The continued interest in legalizing and decriminalizing marijuana has also helped to drive sales, but that could change at any moment. States with cannabis on the ballot in 2020 will determine if marijuana legalization and cannabis reforms continue to spread, or if the issue is losing steam.
The Current Market Is Not Stable Enough To Predict
The cannabis industry appears to be doing what every other industry is doing: responding to the volatile 2020 business landscape. Predictions are based on patterns that appear over a longer period. With all the current unknowns hanging over the industry, I’d question the theory that the cannabis market is growing, or for that matter, that it’s declining. There are simply too many unique variables in the current market to determine what is happening to the industry, if anything.
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