As we approach the year’s end, it’s time to reflect and predict. What a long strange trip it’s been. I think I can say that given that I’m entering my 13th year of focusing exclusively on the cannabis industry. They say this industry ages you in dog years.
It all began to go warp speed in December of 2009, when we prevailed on the groundbreaking Cannamart v. Centennial case in Colorado. For the first time, a court enjoined a local government from shutting down a marijuana dispensary.
This time last year when planning for 2020 I’d gathered market data, analyzed trends, and closely scrutinized industry behavior across the board. Given the Hoban Law Group’s positioning, it’s somewhat “easy” to accumulate perspective because of the vast cannabis industry network our firm services. We have an inside joke at HLG: we like to say we sit at the center of the pizza pie.
We predicted 2020 would be a flat year in terms of revenue and growth at our firm. Overall, this was going to be a time of regrouping for the cannabis industry – not a rebuild per se, but a retool. Our attorneys and advisors had discussed the same with many of our clients as they prepared for the year ahead.
The time had come for cannabis industry operators to ensure a buttoned-down business plan, a focus on the fundamentals, and the requirement of wise corporate governance. There was a growing need for increased emphasis on business integrity and ethics, operational efficiencies, regulatory compliance, and production quality for any industrial hemp farm or cannabusiness to see success in 2020 and beyond. It was no secret that raising capital investment would be tough, and more than likely we’d see an uptick in consolidation.
While that may have been somewhat accurate, no one could have foreseen what this year threw at us —- a pandemic, tremendous social unrest across the U.S and around the world, global economic decline, and a political divide so increasingly deep that most people cannot even see across it to begin to acknowledge, let alone understand, the other side.
For some context, 2019 was not a cakewalk for the cannabis industry, either. We’d seen a tremendous movement toward the growth of an interconnected global cannabis economy and the nascent stages of an international supply chain.
Cannabis stocks gained early in 2019, encouraging a false sense of continued growth. By late spring, we began to see major fractures in many of the Canadian funders and operators. Of course, cash began to wane. Then, regulatory troubles for several of these companies revealed even greater inadequacies surrounding their structure and function, leading to illegal marijuana production facilities and FDA warning letters surrounding CBD products. These developments bogged down the entire sector. Cannabis stocks took a major hit, causing substantial leadership changes for many cannabis companies – CannTrust, Canopy Growth, etc. However, as we’ve explored, this is natural in an emerging industry.
The supply chain servicing many of these companies was ineffective or nonexistent. We also saw the Vape Crisis, as vape-related health issues seem to be never-ending. 2019 brought unprecedented registered acres of hemp, but also diminishing reliable distribution outlets, increased regulatory uncertainty, and a corresponding glut in the hemp and hemp-derivative market. Overall, the year was a mixed bag.
In retrospect, 2020 rolled out surprisingly well. In January, Illinois affected the legalization of marijuana. The state remains a very promising marketplace and set the table for many others that moved forward with commercial cannabis regulations of their own. That same month I traveled to Davos, Switzerland, for the World Economic Forum — thanks in large part to Saul Kaye’s foundation and his annual CannaTech events series, as well as events sponsored by the European-based Consumer Choice Center. We discussed and debated how cannabis, and particularly industrial hemp, were consistent with the goals set forth during the 2020 Forum: think sustainability, carbon-capture in farming, plant-based economies, and the medicinal applications of cannabis. This was perhaps the largest world stage ever where cannabis was so prominently displayed.
At the time, COVID-19 was just a blip on the radar. I returned from Switzerland on January 27, 2020, and witnessed hundreds of people wearing masks at the Zurich airport. I’d never seen this before outside of Southeast Asia; COVID was becoming real. Within weeks, international travel was restricted and I had to “retrieve” my daughter who was studying in the Netherlands after her academic program was abruptly shut down. Economic uncertainty loomed as lockdowns and stay-at-home mandates became the global norm.
The cannabis industry has faced uncertainty before and has, by-and-large, continued to thrive despite all the challenges of this year. The demand from patients and adult-use cannabis consumers has risen to unprecedented levels during the pandemic. Sales have increased dramatically, and Colorado saw its largest cannabis revenue numbers on record.
Cannabis was deemed an essential business in numerous jurisdictions around the United States and the world. Consider this — from gateway to essential in the relative blink of an eye. Cannabis was even touted as a viable therapeutic for COVID. By the summer, governments around the world began to view cannabis legalization and regulation as a tool for economic recovery. Many even speculated that cannabis may be recession proof, leading public policy makers, investors, and the like to pay even closer attention to the industry.
It turns out that this has been a landmark year for the cannabis industry, if not the most successful ever. What does 2021 hold? For now, we’ll just have to pack it up and see what tomorrow brings. The future looks bright as we continue to move toward that light at the end of the tunnel.
Originally published here.
