What’s in store for 2023? Insiders share their cannabis industry predictions

BDSA forecasts legal US sales to exceed $30B in 2023, growing in the range of ~10 percent. Growth will not come across the board, as mature markets will face challenges in the form of  supply, pricing, and regulatory burden. Future growth will be concentrated in new and emerging markets. The New York market will be the single biggest opportunity for growth in the US in 2023, despite issues including the delay of adult-use sales, limited licensing, and illicit competition that may blunt early-stage sales.

Next year will see headline-making deals as M&A activity heats up, fueling consolidation across all markets. 2023 will also see attrition across the supply chain, especially in mature markets such as Colorado, California and Oregon. At the same time, emerging markets such as New York, New Jersey, Missouri, and Maryland will incubate new entrants to the market, both brands and retailers. The New Jersey market alone has seen its brand landscape massively expand, with the total number of brands in the market already growing by ~30 percent in the first six months of adult-use sales.

Regardless of market status, consumer-centric strategies will take on an increasingly important role for small and large operators alike. At retail, expect a focus on consumer engagement and education, open format floorplans, and multiple fulfillment options (curbside, delivery, in-store, drive-up). Brand and product growth will come out of premiumization, portfolio price tiering, differentiated offerings, and a focus on consistent consumer experiences.

As more states come online, big multi-state operators are only getting better at swiftly setting up shop in newly legal regions. I think small mom-and-pops will need to strategically collaborate and potentially merge to remain competitive. We know the sales dip will continue while people cut their overall spending, so I believe the businesses that are smart about stretching their resources over thin times will have the staying power. That said, let’s not forget how vast an untapped audience remains. Every day, hundreds of people walk into a dispensary for the first time, ready to make their first ever cannabis purchase. There are huge parts of the population that haven’t yet heard enough evidence or recommendations from the right people for them to feel comfortable trying cannabis. Even in the CBD realm—only something like 33 percent of Americans report having used it. The future still holds a lot of promise and opportunity for all.

We will retain a strong focus on our four pillars of innovation in 2023. They align well with how our customers will be living and enjoying cannabis edibles in the New Year. Our first pillar is flavor and, according to BDSA, flavor is now the number-one deciding factor in a consumer’s purchasing decision around edibles. As a chef, this is my preferred medium of communication, so I really focus on flavor and making it an enjoyable first step to any customer’s cannabis experience. Our second pillar is microdosing as we are increasingly seeing our customers come to us in order to better control their dosing experience. By offering a variety of dosing options beginning at very low micro amounts, we’re able to give the customer the control she needs. Our third pillar is the incorporation of minor cannabinoids. CBD was the first minor cannabinoid to engage a larger customer base that could experience the plant without a psychoactive effect and realize that this is not a scary plant. We’re using CBN to offer a good night’s sleep, as well as THCV, which adds an energizing, uplifting quality to our confections. Our fourth and final pillar is fast-acting. We have found that our customers are looking for a quick onset that disperses more readily than traditional edibles.

My prediction for the Massachusetts cannabis industry is that we will finally start to see a steady increase in social equity operators getting licensed. My company Rolling Releaf will be receiving our final license in January which will put us on track to start delivering in February.  Back in August of this year, the Massachusetts legislature passed a big reform bill which included the creation of a Social Equity Trust Fund that will provide equity applicants with grants and no-interest loans. That will go a long way in helping equity applicants finally cross the finish because we all know how big of a barrier access to capital is.

Due to the passing of this Reform Bill, the Cannabis Control Commission will have to make a regulatory revision to implement these new changes.  This will include accepting comments from the public in both verbal and written form. Advocates are hopeful that with this revision occurring for the reform bill, the commission will also implement other changes to the regulations since they will be going through that process anyway. Changes including reducing the Two Driver Requirement for delivery companies, allowing adult-use consumers to receive discounts, and easing up on the strict marketing/advertising regulations. 

In other sectors of the Massachusetts market, there have been whispers of a potential moratorium for issuing cultivation licenses due to the current oversupply of cannabis and cannabis products in the state which in turn has caused wholesale prices to drop significantly.

2023 has the potential to be a seismic game-changing year for the Massachusetts cannabis industry.

In 2023 we’ll see an increase in the asset light business models, increased M&A activity, more IP brand launches nationwide, and significant market expansion into the Midwest and East Coast markets.

Twenty twenty three will be the year Black, Indigenous, People of Color (BIPOC) & woman-owned businesses determine the course of the cannabis industry and our brands begin to dominate both retail and non-retail storefront shelves because of consumer awareness and demand. Additionally, leaders in the cannabis CPG space will follow suit by centering their focus on these value-add businesses and brand partnerships as their primary marketing for the year. As always, this may or may not be something to look forward to depending on how the partnerships are structured at the end of the day. What will be interesting to see is the media shift away from “Big Brand” coverage and place significant priority on craft flower and manufactured cannabis goods owned by BIPOC & women.

Public support for federal legalization is at an all time high, so we anticipate an increase in use from both a medical and adult use perspective, with women and the elderly leading growth. Alternately as the market grows, competition will diminish. Access to capital will continue to shrink as the market comes to terms with the inflated valuations of the past decade, increasing the advantage of larger operations in both new and existing markets. We’ll see more forced mergers and acquisitions as smaller operations entering into partnerships hoping to secure their space in the industry. Finally, while we appreciate the president’s call to reschedule or deschedule cannabis, we don’t see that happening in 2023. That said, we are very interested in potential citizen ballot initiatives in Florida, Wyoming, Nebraska and Idaho, and watching Texas and Pennsylvania closely on the issue of decriminalization.

Given the macroeconomic headwinds the industry is facing as well as the continued lack of access to traditional capital, I predict we will see increased consolidation. Competition will be significant, and operators will need to find ways to distinguish themselves within the market. I anticipate retail operators will continue to grapple with resetting expectations on discounts and promotions given the unsustainable trajectory that is leading to a race to the bottom. There will also be a larger focus on customer experiences at the retail level, with operators utilizing more traditional CPG marketing tactics to drive foot traffic and brand awareness.

Current trends in premiumization will grow to demand more connection to full spectrum wellness, we’re already seeing this with advanced terpene blends and minor cannabinoid usage but innovation around whole plant consumption will be key for ingestible products in ‘23 and beyond.

Functional products are coming in hot and we’re not too far off from the cannabinoid enhanced multi-vitamin, medical and recreational consumers alike are looking to make low-dose cannabis wellness part of their daily routines.

It’s going to be a wild year for social consumption, specifically how ingestible products will need to be formulated with some level of onset and offset predictability to be served safely in a consumption lounge environment. While there is always going to be a time and place for traditional edibles, that place is typically best called your couch and not the club.

2023 will be a big year for this industry. It will be the year that tips the scale where more states will be recreationally legal than not. This will further cannabis normalization and support consumers to express and consume this plant without any judgement or repercussions.

I also predict (and hope!) this year is a transformational year around cannabis reform. That the SAFE banking act passes, furthering access to capital in the space. That every single person in prison for non-violent cannabis-related convictions are released and their records expunged. And that the scale will tilt more and more towards benefiting independent operators (many of whose lives were impacted by prohibition) with new states like New York turning on, whose licensing structure supports this; and other states like New Jersey and Illinois where many independent license holders are coming online. With this shift, cannabis culture and authentic brands will further come to the forefront of value creation in this industry.