The year just passed will surely not go down in history as one of the best for humankind. The Coronavirus has posed many challenges to global health and economics, also showing how these two can be closely intertwined. The cannabis industry represents one of those sectors that indeed combines those two, as its mission is to provide people with health conditions with effective and reliable medicines. Once realized this, many countries deemed the cannabis industry as an essential business, which allowed the sector as a whole to continue to operate amidst the pandemic, without leaving patients alone. “As the pandemic lingers, we still see the medical cannabis market performing well,” Kyle Detwiler, CEO of Clever Leaves, says. “The resilience, professionalism, and creativity in times of setback have been critical to the success of our team to navigate complex regulatory frameworks and to maintain our customer’s and investor’s support.”
Because of that, there are high hopes for the industry in 2021. “We believe the cannabis industry will continue maturing on all three fronts of financial performance, investor acceptance, and legalization,” Anthony Coniglio, CEO of NewLake Capital, points out. “Good 2020 financial performance will improve in 2021, more investors will support the industry and legislative action is only a matter of time.” One of the most pivotal moment occurred during the last US elections, during which US citizens in some states were asked to express their opinion on cannabis legalization. “The election sealed the fate for the cannabis industry declaring it a clear winner in the years to come,” he continues. “This success at the ballot box is a strong catalyst for the cannabis industry. Each state with ballot initiatives has moved forward to legalize cannabis for medicinal or adult-use, further solidifying the inevitability of federal legalization, thus positioning the industry for sustainable, long-term growth in 2021.”
With more states in the US legalizing cannabis, most likely there will be more regulations. “The liability risks because of a lack of regulations remind regulators of the tobacco industry when it was unregulated in the past,” Everett Knight, executive VP of The Valens Company, points out. “Expect to see increased safety requirements and product recall processes instituted int heh US market. US multi-state operators will have to transition to GMP and food safety regulations imposed on Canadian LPs.” An increased focus on strict standards will also allow US cannabis businesses to tackle the international market, which has been expanding rapidly. “A strong trend has emerged in the last couple of years across the world,” he continues. “Medical legalization paves the way for adult-use. This will come through bigger and faster in 2021. Mexico and Israel are close to legalization. These markets will open up a landslide of opportunities for established companies in the US and Canada looking to capture global market shares. Everyone has to remember that the cannabis space is just getting started.”
“Brazil appears to have become an attractive market as more companies are able to introduce their products and as local pharmaceutical companies develop and register more products,” Dr. Jordan Lewis of Fotmer Life Science says. “Uruguay also is gaining new momentum as the government provides support to help develop an efficient industry, especially with regards to accelerating the export process. Uruguay’s latest milestones achieved by the industry have positioned the country as one of the largest exporters of dry flowers in the world and a logistic hub. Uruguay is synonymous with trust, transparency, and economic resilience and is positioned hand in hand with the most developed nations.”
Dr. Jordan Lewis
Considering all of that, many cannabis executives agree on the fact that those cannabis companies that in 2021 will demonstrate to be more factual and to have let go of the initial rush, will be the ones that will eventually dominate the sector. “2021 will likely see a continued focus on operations and execution, separating the major players from those that were always built on hype and smoke and mirrors,” Kris Kane, president of 4Front Ventures, explains. “We may see some name brands go under in 2021, but the cream will rise to the top and the likely eventual big winners in the market will start to emerge.”
“2021 will be the year companies pivot their focus to generating positive cash flow and exhibit a viable business model to investors,” Dr. Jordan Lewis of Fotmer Life Sciences remarks. “The market no longer rewards aggressive expansion and is now looking for material profitability. Companies that can articulate a near-term path to profitability will be able to witness an industry kick and have a higher probability of becoming highly profitable.”