🔮 What’s Coming For Cannabis In 2020?
Our five biggest predictions for weed in 2020
We’re pulling out our crystal ball and bringing some of the biggest predictions and trends to expect for the year over the next five weeks. We’ll be holding ourselves accountable and updating through the year as we progress. Stay tuned!
#1: Pathways to cannabis research in the U.S. will see major improvement.
The Situation: There’s a fairly established consensus around the negative impact that our current research paradigm has. Schedule I status has made initiating research incredibly difficult, while the use of only one source of low quality weed (what up, University of Mississippi) constrains supply and raises comparability issues. The head of the National Institutes of Health even acknowledges the hurdles, as does the director of the National Institute on Drug Abuse and various other agencies. Heck, researchers are even importing cannabis from other countries.
What’s Coming: Lawmakers recognize the problem (even GOP ones!) — a House panel is actually evaluating the research roadblocks today, and there’s multiple bills in Congress designed to specifically address the issue (or just legalize marijuana fully). 2020 will see the research situation improve, as the mounting political pressure forces the DEA to open up alternative sourcing options beyond Ole Miss.
#2: The industry cash crunch will hit a tipping point in the next few months, with a lack of bankruptcy protections further complicating the issues, forcing a big name to make drastic moves.
The Situation: As we’ve talked about extensively, many cannabis companies are facing a cash crunch, and it’s causing pain up and down the value chain. We’ve seen companies exploring sale leasebacks, cutting employees, and selling assets to grow their cash reserves but, up to this point, most moves have seemed fairly proactive, getting ahead of potential issues. But the choppiness persists, both north of the border and in the U.S. Rumors are swirling that MedMen can’t pay its vendors, a scandalous story is breaking that Eaze is almost out of cash, and High Times is generally flailing.
What’s Coming: We knew it could get ugly, but things may already be boiling over (to the point that we had to move this prediction release up). The possibility of a full fledged meltdown isn’t just contained to industry B-players — big names are going to endure substantial pain. The best case scenarios are the announced cost cuts and unorthodox pivots actually working out. The worst… is hard to say. Bankruptcy isn’t an option for firms (as it’s governed by federal law), so expect to see informal restructurings, state receiverships, and distressed fire sales. It’s about to get weird.
#3: The FDA will provide clarity on CBD regulatory environment in a move that both stabilizes the industry but also bursts some of the hype.
The Situation: In contrast to the intense regulatory and legal burden of the THC/marijuana industry, CBD remains a bit of a Wild West. The FDA still maintains the illegality of adding CBD to foods or marketing as a dietary supplement, and is overall wary of a perceived lack of research into CBD. But demand for CBD products continues to skyrocket, new brands are proliferating without quality controls, and advocates are pushing for clarity. States like New York and Florida aren’t waiting for the FDA to act, but creating their own regulation.
What’s Coming: Congress recognizes the situation is untenable. Even Mitch McConnell, staunchly anti-marijuana in most aspects, sees resolving the situation as a priority. The recent Appropriations bill included funding for the FDA to develop an enforcement discretion policy and a new bill proposes allowing CBD to be marketed as a dietary supplement. Expect the FDA to move along with the pressure, perhaps towards an interim regulatory structure that resembles New York’s, subject to further future research into the FDA’s concerns around CBD.
#4: Legalization will remain on a roll in 2020, with five states going recreationally or medically legal, but the federal situation will remain frustrating.
The Situation: Cannabis is medically legal in 33 states total, while eleven states have legalized recreational sales. At this point, there’s a chance of some form of legalization in close to every remaining state, with Vermont, New York, New Jersey, Connecticut and New Mexico all likely candidates for recreational legalization this year. Even the deepest of red states like Alabama, Mississippi, and South Dakota look like decent shots to legalize at least medically.
What’s Coming: At least five states are going to legalize marijuana medically, or move from medical-only to recreational. How did we reach that number? A highly proprietary process (that you’ll need to pay for Cannablurbs Premium™ to get, and totally wasn’t me summing up my best estimated probabilities in Google Sheets).
Jokes aside, the implications of an election year mean (a) substantial opportunity for progress at the state level, thanks to ballot initiatives, but also (b) probably less likelihood of anything happening at the federal level. With drug reform as a big issue on most Democratic candidates platforms and a divided Congress focused on the election, the soonest we could likely see change is if Bernie wins and legalizes Day 1. But, whether Republican or Democrat presidential winner, continued progress in the states should translate to federal level at some point next term.
#5: 2020 will see a rebound for the industry by the end of the year, but a rising tide won’t lift all ships — especially not the leaky ones.
The Situation: 2019 was a rough year for cannabis companies, and 2020 has been no less brutal. American and Canadian cannabis stock indices reached multi-year lows, while private capital raises slowed dramatically as well. It’s ugly, and it seems like it’s only getting uglier (just look at the Cannablurbs headlines this week, for example). The world’s two preeminent markets, California and Canada, appear ripe for carnage, with everyone asking: when will it end?
What’s Coming: The night’s always darkest before dawn, right? 2020 will see the industry rebound by year’s finish, as improving market conditions, legalizing states, and aggressive cost cutting manifests in some companies thriving. The key, however, is it might not be the biggest names of today — certain companies’ financial struggles likely won’t be overcome, and thus will entrench some of the better positioned and well capitalized big incumbents, as well as provide opportunity for rising, less publicized players. In many ways, this might be the end of the beginning for the cannabis industry. While we likely won’t know by end of year exactly which companies are poised to be dominant for years, we’ll have a much better feeling for who has a good chance.
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