2021 was a big year for us here at Jage Media. We launched our first live show, MJ Unpacked Las Vegas, made hundreds of new friends and connections, and had fun tracking trends and developments in our growing industry. On that note, we asked some of our favorite industry insiders which trends and developments will define the industry in 2022.
Note: This is our second annual batch of NYE predictions. Check out last year’s post to find out whose predictions came true.
George Jage, CEO, Jage Media Inc.
2022 will be the year of the brand…Retailers have historically owned the relationship with the consumer based on limited shelf space and significant category duplicity. With expanding distribution capabilities, more significant investment into brand marketing, and emerging DTC models, brands will gain ground to own the relationship with the consumer moving forward.
Fast-acting, quick up, and shorter intoxication intervals will own the edibles and beverage segments. This continued growth in mirroring the intoxication profile of alcohol (without the hangover) will foster the movement towards on-premise cannabis consumption.
Hilary L. Yu, Founder, Our Academy
So far the options for start-up capital for social equity businesses have been extremely limited, as traditional lenders have yet to enter the cannabis space and friends and family rounds are less common among social equity-qualified businesses. Look to see more creative alternative financing options for diverse cannabis founders as interest grows in cannabis as a social impact investment opportunity. We’ll also see more investors learn the added value equity licenses offer–such as priority licensing, access to grants and low-interest loans, and the power of purpose-driven and community-supported brands.
Community-driven collaborative capitalism will be a key theme, especially among equity businesses.
As the California industry continues to mature, economies of scale are increasingly necessary to remaining competitive. While the most common path is to merge or acquire, equity businesses are beginning to recognize that business partnerships and pooling arrangements can have the same advantages, without the risk of losing control of one’s business.
The shared challenges and incentives of social equity businesses create a natural alignment that outpowers traditional knee-jerk reactions to view everyone else in the space as a competitor. In 2022, I believe this trend toward strength in unity will increase exponentially and protect social equity businesses and programs en-masse.
Eric Sklar, Co-Founder and CEO, Fumé
There is a lot to look forward to in 2022. It looks like we finally have visibility on cannabis banking reform from Congress, so it could be a big year for this. There is the possibility of interstate commerce between the western legal states, which would be a game-changer. If it happens, a lot will be due to the visionaries in Oregon led by Adam Smith.
I think the informed cannabis consumer will move away from high THC content as their main decision-making factor and start evaluating their purchase decisions based on the terpene profile of the products they choose. They will begin to demand responsible growing practices and sustainable packaging from the brands they align with, as savvy consumers have come to expect this in the CPG space and will begin making purchase decisions based on these factors.
As for California, I see a stabilization of raw cannabis prices in the state after a roller coaster of a year. And, if the state cares at all about the success of the legal and the demise of the illegal cannabis trades within the state lines, they will give tax relief to those who are following the law.
Thomas Winstanley, Vice President of Marketing, Theory Wellness Inc.
The industry is growing at a rate faster than regulations. With more states approaching legal cannabis, the level of complexity will continue to expand an already challenging system. Things will be more difficult when factoring in mergers and acquisitions, social equity provisions, and state-specific statutes. Hopefully, the federal government can ease some of those hurdles with basic legislative amendments.
In Massachusetts, we’re likely to see downward pressure on pricing start to take effect. With the number of operators and retailers coming into the market, pricing will probably dip with supply meeting demand. This presents a unique opportunity for discerning customers to develop buying preferences around product categories based on quality—not availability. More products result in more options for consumers, which helps the market mature into a phase where quality becomes a key criteria in the buying process. This allows brands to define themselves by reputation over convenience and a net benefit for the consumers.
Wendy Campell, National Sales Director, Jage Media Inc.
M&A will continue as elite MSOs gobble up CPG brands and strong single-state and multi-state retailers. Brands will continue to expand outside of licensed states via IP licensing deals (licensor and licensee agreements). B2B trade marketing, along with B2C marketing, will increasingly become more important as more states flip over from medical to adult-use legalization.
Brands need to speak to buyers (retailers and consumers) and build relationships to secure repeat buys and customer loyalty. We’ll start seeing more and more retailers creating franchising deals–West Coast retailers will show up on the East Coast via franchising agreements. Flavor, feel, and effect will become the new normal for marketing products to consumer lifestyle needs.
Jeanette Ward Horton, Executive Director, NuLeaf Project
I’m looking forward to seeing the state of New York begin work to invest the 40% of cannabis taxes they dedicated to the communities most harmed by the War on Drugs. They’ll give us a roadmap to follow in Oregon, as I believe we’ll pass a reparative economic justice bill for Oregon’s Black and brown communities most harmed by over-policing and the War on Drugs.
I think from a cannabis social equity perspective, we’ll see more cannabis companies realize that creating a better industry starts in their own house…They’ll take data-driven looks at procurement spend and hold themselves accountable to spending more of those dollars with diverse-owned businesses. Similarly, companies will take a critical eye to employee diversity.
Is their workforce diverse at the C-suite, board of directors, and management levels, as well as entry level roles? Is pay equal across genders for similar roles? This is the deeper diversity work cannabis companies are going to be doing in 2022.
And finally, equitable access to funding for historically excluded entrepreneurs will continue to be a focus in and outside of the cannabis industry.
Morgan Worley, Business Development Specialist, Jage Media Inc.
In broad terms, I foresee the cannabis industry really starting to prepare for federal legalization and the eventuality of interstate commerce.
Social equity candidates will get a stronger voice in 2022 and see more doors open for business partnerships and investments. Fortunately, it seems as though the cannabis industry is prepared to take on the social injustices of our past by making communities of color the priority of our present and future. We will see a record number of people released from incarceration due to nonviolent cannabis charges. I hope to also see a drastic decline in new cannabis-related charges across the US in 2022 as well.
Washington is an interesting cannabis state market with state license limitations for investment and IP licensing royalties. These limitations make preparing for interstate commerce and the next 2-10 years of business difficult, but I do foresee Washington brand and dispensary owners stepping across their state lines in 2022 to start developing the relationships they’ll need once we finally succeed at interstate commerce.
Priscilla C. Agoncillo, CEO, Original Breeders League & President, Cannabinoid Industry Association
For 2022, I am particularly excited to launch some exciting research and genetic preservation initiatives with the government of Morocco along with its top universities. In support of the cannabis genetics segment of the industry, I am seeing the development of more tools and support platforms for cannabis breeders. Essential tools such as easy and less-costly access to full-genome sequencing and even cultivar fingerprinting or genotyping to assist with intellectual property protection for breeders.
There is also the new development of monetization pathways utilizing blockchain technology that will help track cannabis genetic IP that will trace back to the original breeder of that genetic to set the standards of transparency to support these artisans.
The timing is perfect for the advancement of the cannabis genetics segment as it has just now reached the apex of technology, regulation, and industry demand.
In 2022, we will be working on changing the landscape where companies no longer have the option to take or steal cannabis cultivars to just rename them as their own work, destroying the fabric of history and the roots of those cannabis genetics. We will help demand transparency from the companies and brands to empower consumers with the knowledge they deserve and need to understand to personalize their use of cannabis as medicine–they need to know and trust that they are sticking to the genuine and authentic cultivar that works best for their needs.
Onell Crawford, Host of Elevated Innovation on Altered TV
I think we are still a little early for any major cannabis vape hardware sales and consumption in the EU. However, I believe 2022 will show a lot more European countries entering the cannabis arena.
I think we will see more and more companies in the cannabis industry incorporating NFTs into their business.
With some creativity and out of the box thinking the opportunities are endless on how to create utility with NFTs, especially in the exciting world of cannabis.
Many now understand the benefits to the entourage effect and having a more balanced cannabinoids and terpene profile, which points to a surge in live resin cartridges. There is also a growing awareness for solventless extractions so we will continue to see growth in live rosin for its solventless extraction, alongside the popular live resin formulation.
Scott Grossman, Vice President of Corporate Development, Turning Point Brands
In the US, the three major themes for 2022 we’re seeing are segmentation, specialization, and industrialization.
We believe we’ll see continued efforts by brands to target specific customer demographics instead of blanketing the entire market…The brands that will win will be laser-focused on who they are, will have a deep understanding of who their customer is, and create products specific to this customer’s needs. Similarly, form factors will continue to naturally evolve for this new customer.
The often-mandated vertically integrated MSO model is somewhat of a “blunt tool”—players will realize that they can’t be world-class doing all parts of the value chain. While regulations won’t allow many to outsource parts of the value chain, we expect some will address the status quo by supplementing owned operations with tuck-in acquisitions and/or strategic alignments in areas of food science, manufacturing, distribution, and sales optimization. Over time, we expect more parts of the value chain to be offloaded.
The old way of doing business is rapidly changing. Many parts of the manufacturing process will see tremendous technological advances to drive operating efficiencies. We believe this is “table-stakes” to offset continued declines in cannabis spot pricing which we don’t anticipate relenting anytime soon, especially in mature markets.
Through a broader, global lens, US players vs. Canadian LPs will continue to be a “tale of two-tapes”—US MSO’s will continue to demonstrate impressive growth and requisite cash flow, whereas Canadian LPs will continue to struggle operationally. We expect continued consolidation in both territories—US players will do this from a position of strength.
In certain states, and especially in California, we likely will see strong brands get stronger, while many will likely cease to exist.
Those with poor business models, inflated spend, and bad unit economics will unfortunately get hurt.
The best brands will find a way to persevere by adapting their business model to survive in various market conditions.
LaToyia Rucker, COO, Calexyium
Michigan has a strong medical and adult-use cannabis market, and during the pandemic we have seen sales increase by over 51%. In 2022, we expect even more growth for several reasons. More local municipalities are opting into adult-use programs around the state. Because of that, large MSOs are racing to the Michigan market….There is a current marketplace battle between corporate and caregiver products. Caregivers will continue to have a strong place in the market but will have to continuously compete to keep market share against competitive MSOs prices.
In the Detroit local market, I predict adult-use sales to begin by the end of 2022 as local officials are in the final stages of passing an equitable ordinance that provides opportunities for social equity entrepreneurs.
Lilli Keinaenen, Founder, Changemaker Creative
Sustainability and purpose-driven brands will become true contenders in the cannabis industry. In a crowded market, things that differentiate you from others can make you stand out. When surveyed, over 90% of millennials said they would switch from a product they typically buy to a purpose-driven one, and almost 30% of Gen Zs had ditched a non-sustainable brand last year and switched to one with sustainability cred.
Bridget May, Founder & CEO and Kim Howard, Co-founder & COO of Green Bee Botanicals
We’ll see more vegan cannabis-infused products (gummies, food, skincare, etc.) and more mission-driven brands — those are two of the fastest-growing buyer trends among buyers in general, especially younger buyers. Cruelty-free is also a non-negotiable.
Micah Tapman, CEO, BDSA
This past year was a breakthrough year for legal cannabis, with U.S. legal cannabis sales expected to total ~$25B for 2021. But 2021 was just the beginning, as BDSA expects the US legal cannabis market to reach ~$30B in 2022.
So, what do we suggest you keep an eye on in the New Year? Here are a few top trends to watch out for…
Brand recognition will grow, and brand loyalty will emerge. As brands continue to drive consistent, expected experiences and launch in new markets, greater recognition and loyalty will emerge. Currently, only ~25% of consumers claim that a brand they have used before is a major factor influencing their cannabis product purchasing. We expect this to grow substantially in 2022.
The race for global dominance is under way, but CPG will not take the lead. MSOs and publicly traded companies, including Canadian LPs, are already looking to new international markets, but mainstream CPG companies are still maintaining a cautious “wait and see” approach. In prior years we expected CPG to move, and they still have not (with exceptions, obviously).
More blatant quality cues will drive greater price differentiation. Quality cues (such as solventless extraction, minor cannabinoid content, terpene profiles, and grow/trim methods) will drive greater price differentiation. (For example, gummies with CBD are priced ~20% higher on average across BDSA tracked markets, and CBD gummy sales have increased ~40%.)
For more insights on the year ahead, check out BDSA’s full list of 2022 cannabis market predictions.
Chris Girard, Strategic Operations, Paralegal Cultiva Law LLC.
Further states will legalize cannabis, and we will see a new shift in the industry as a whole. As the next group of risk class moves into a further regulated market, we will see this new influx accelerate the industry as players from established states branch out to give new cannabis businesses a head start, with established experience and proven effective business models. I also believe we will see an increase in discussions regarding interstate commerce and banking.
I believe that Washington’s mature market will continue to conglomerate as larger players move into the financial space and inject much-needed fresh capital, in an effort to lay a footprint for rapid expansion of regional or national operations. This economic eventuality will create the need for mid-level players to really band together to share resources such as processing, packaging, etc. I am also hopeful that Washington’s social equity program will begin to take form and roll out the first steps in a more inclusive industry.
Sian Seligman, Head of Marketing, Resonate Blends
California consumers have been gravitating towards more convenient, discrete home delivery services and e-commerce through technology. In the coming year we will see other types of innovation from brands by way of new product types, new takes on traditional formats (flower, vapes, edibles). California is a state known for innovation and we’ll see innovation and technology as a means to enhance the experience of consuming cannabis.
With rising consumer interest in beverages and the replacement factor of alcohol for cannabis, Consumption Lounges will drive normalization and draw in more new consumers to cannabis. This will be driven by the consumer popularity of beverages, but also in the desire to find more social and entertaining ways to consume cannabis.
As for the industry as a whole, we’ll see more mainstream CPG brands enter the market. With some 66% of Americans in favor of cannabis legalization, many big box brands who may either be on the fence or dipping their toe in the water will dive in. As consumers learn more about active constituents in cannabis, they are beginning to factor their learnings into their product decisions. Terpenes and minor cannabinoids will take center stage in 2022. We’ll begin to see greater focus on education and marketing communication of their power and effectiveness.
Diversity and inclusion will grow in importance. We’ll see more BIPOC leaders and women-led brands emerge.
Ricardo Willis, CEO, Hanu Labs
The vape industry will face a new level of scrutiny from local governments as the safety of vape cartridges is continuously called into question. The conversation will be more focused around consumer safety in relation to vaping hardware and vaping substances. Some counties and cities may attempt to introduce new rules and regulations that will, without a doubt, have an adverse impact on the vaping industry.
On a more positive note, the hospitality segment of the industry is due to make some waves in the cannabis space in 2022. Legislation for cannabis lounges is moving forward in several states, opening the door to a huge demographic of consumers seeking a cannabis-friendly environment with a bar-like atmosphere.
I predict more cannabis-friendly lodging, dining and entertainment options are on the horizon, paving the way for a new generation of cannabis tourism to take hold.
Companies in the cannabis industry in California will face a year of further consolidation. The draconian regulations and over-taxation of operators in California are completely wiping out small farmers and social equity businesses from the landscape.
Jamie L. Pearson, President, CEO, Bhang
Flower will continue to be a major driver of sales growth. Flower sales will exceed 10 billion next year and overall cannabis sales will exceed 30 billion. It’s a bold forecast for sure but I think the factors of COVID changing habits, legalization conversations going mainstream, and stigma decreasing have combined and will measurably impact sales.
Fast-acting edibles will become the norm. The conversion will take a few years, but I predict that close to 100% of the edibles and ingestibles categories will be made with fast-acting nano-technology.
Cannabis will fully embrace all things tech…Data, Crypto and NFTs.
Consolidation will continue with a focus on brands. MSOs and MSBs have long understood that cannabis is CPG. Cannabis culture plays a role in which brands end up on the shelf. Shelf-space is the commodity. The dispensary ecosystem is controlled by legacy cannabis professionals. The generation turning 21 right now has lived in a world where cannabis has always been legal somewhere. They are also the generation that’s been marketed to so heavily, they demand authenticity. The brands that outsell everything right now get shelf space because they are authentic, mind their environmental impact, focus on social equity, and behave like they actually have roots in the culture–because they do. This can’t be faked or bought and it wins shelf space. It’s not pretty packaging – it’s the total package. The MSOs know this and are keeping their eyes on the top brands because they need that shelf space to keep their revenue rising. Kudos to Nancy Whiteman at Wana Brands who set the bar incredibly high for MSOs to purchase MSBs.
The Northeast market (NY & NJ specifically) will start putting up big numbers. It will take a while to ramp up, but when the NE states start rolling, the markets will fully recognize the Godzilla that region really is. Population density, tourism, consumption lounges, good legislation, and a voracious appetite for cannabis are a perfect combo to crush.
The industry will go more global. The biggest North American companies are eyeing the global market and setting up for importing and exporting. As more companies go global, international branding and marketing will become the discussion topics at conferences and in board rooms.
Dollars will flow to the development of consumption lounges. As more people become comfortable with cannabis, the demand for consumption lounges is growing and many new lounges are opening in many different markets. Cannabis brands will be marketing themselves in lounges like alcohol does in bars. Companies and investors are already dumping cash into their development. Barcelona has so many great lounges and of course, there’s the infamous Happy Munkey, which set the standard. It’s a very welcome prediction!
Mikaela McLaughlin, VP of Business Development, springbig, inc.
I expect to see more M&A throughout North America in 2022 and I anticipate cannabis taking a very global stage as more countries look to legalize. In addition, I expect to see cannabis brands take center stage as the industry evolves.
I work out of springbig‘s HQ office in Boca Raton, Florida. I would love to see adult-use up for a vote in Florida in 2022. I expect new entrants into the Florida market in 2022 to bring some much-needed competition to the state.
Windy Anderson, General Manager, Agate Dreams
I think we will still see more people turning to cannabis (THC and CBD) for their needs instead of alternatives. Which will result in a rise in revenue and taxes for the local governments…I also see online ordering and curbside pickup rising even more in sales in 2022.
Matt Melander, President, CFO, LEVIA
As infused beverages gained popularity in 2020 and 2021, the upcoming year will most likely be no different. I believe traditional CPG brands are going to follow suit and try to enter the market as they continue to follow the trend of cannabis beverage development and acceptance. While I anticipate an increase in new entrants in the infused beverage space, innovation amongst existing brands will only become much more prevalent – we have to keep up with potential new competition or risk losing our market-share.
I remain hopeful that the regulatory framework will continue to ease, but I do not think massive deregulation in 2022 is feasible or realistic. I do think progress is in the forefront, mainly with the continued progress for a change in banking regulations that allows the industry to operate more like traditional CPG.
I think this will allow the industry to continue to mature and open the door for more social equity participants, giving them their chance at the “American Dream.”