December 05, 2024

2024 Cannabis Market Recap: Trends and Predictions for 2025

The Hottest Topics in Cannabis for 2024: What Growers and Retailers   Need to Know

The cannabis industry is constantly evolving, and staying ahead of the curve is essential for licensed growers, producers, and retailers. Whether you’re dealing with new regulations, market shifts, or emerging consumer trends, navigating these changes requires both awareness and adaptability. Here’s a closer look at the most significant developments in cannabis right now—and what they mean for you.

Hemp-Derived THC Products: A Loophole or a Liability?

With federal legalization still out of reach, many cannabis companies are exploring hemp-derived THC products. These products leverage the 2018 Farm Bill, which legalized hemp with less than 0.3% THC, creating a legal gray area for potent THC offerings. Companies like Green Thumb Industries and Tilray Brands are capitalizing on this loophole, but the landscape is fraught with risks. Some states, like California and New Jersey, have outright banned these products due to safety concerns and a lack of testing standards.

If you’re a licensed grower or retailer, this trend might feel like a double-edged sword. On one hand, it’s an opportunity to innovate and expand your offerings. On the other, the regulatory landscape is a minefield. While it’s tempting to jump on the bandwagon, compliance is critical. Consumers are becoming more educated about product safety, so staying transparent and adhering to high standards will build trust—and protect your reputation.

New York’s Cannabis Market: Growth Amidst Growing Pains

New York’s cannabis market is on track to exceed $1 billion in sales by the end of the year. This growth comes after a rocky start, with challenges like licensing delays and a booming illicit market. Recently, stricter enforcement has led to the closure of over 1,000 illegal dispensaries, giving licensed retailers a fighting chance. However, concerns remain about whether social equity goals are being met, as communities disproportionately affected by the war on drugs still face barriers to entry.

New York growers and retailers are in a unique position. The market is stabilizing, but the path hasn’t been easy. If you’re operating in New York, this is your chance to solidify your position and build a loyal customer base. For those watching from other states, New York’s experience offers a valuable lesson: success in this industry isn’t just about surviving competition—it’s about advocating for equity and inclusion to ensure a sustainable future for everyone.

Marijuana Surpasses Alcohol in Daily Use: A Shift in Consumer Habits

For the first time, daily marijuana use has surpassed daily alcohol consumption in the U.S., with 17.7 million daily marijuana users compared to 15 million daily alcohol users. This shift reflects changing perceptions about cannabis as a safer, more natural alternative. However, it also brings increased scrutiny, with concerns about potential health risks like cannabinoid hyperemesis syndrome and cardiovascular effects.

As a retailer, this trend is both an opportunity and a responsibility. Consumers are looking for alternatives to alcohol, and cannabis is stepping in to fill that space. This is your chance to educate them—not just about the benefits, but about responsible use. Build trust by being transparent about potential risks and offering products designed for moderation. Remember, our goal isn’t just to sell—it’s to create a community where cannabis is used safely and responsibly.

Excise Taxes: Navigating the Economic Landscape

State excise taxes (SET) continue to shape the cannabis industry’s economic reality. States like Washington and Massachusetts tax only at the retail level, making it easier for businesses to predict their tax burden. Others, like Illinois and Colorado, impose taxes at both cultivation and retail levels, complicating financial planning for vertically integrated operations.

Taxes can make or break your bottom line. If you’re a grower, understanding your state’s tax structure is non-negotiable. But this isn’t just about compliance—it’s about strategy. Are you adjusting your pricing to account for tax burdens? Are you leveraging tax credits or rebates where available? And if you’re operating across multiple states, are you prepared to handle the complexities of varying tax systems? The businesses that thrive are the ones that plan ahead.

Cannabis Meets Craft Beer: A New Frontier

Companies like Tilray Brands are making waves by acquiring U.S. craft beer brands, positioning themselves for the eventual sale of marijuana-infused beverages. While the craft beer industry is facing declining sales, Tilray sees potential in using these networks to distribute cannabis drinks when federal legalization arrives.

This trend is a signal: the cannabis industry is diversifying, and so should you. Whether it’s exploring partnerships with other industries or expanding your product lines, now is the time to think beyond the traditional grow-and-sell model. But don’t lose sight of your core strengths. If you’re a grower, focus on producing the best product possible. If you’re a retailer, make sure your customer experience is second to none. Innovation is exciting, but it’s authenticity and quality that keep customers coming back.

So What’s Next

As we approach 2025, the cannabis industry is navigating a dynamic landscape marked by evolving regulations, shifting consumer behaviors, and significant market developments. Here's an insightful overview of the current trends and projections across the three largest U.S. cannabis markets: California, Michigan, and Florida.

California: Navigating Market Saturation and Regulatory Challenges

California remains the nation's largest cannabis market, with projected sales of approximately $4.7 billion in 2024. However, the state is experiencing a decline in sales, attributed to market saturation and regulatory hurdles. The number of active cultivation licenses has decreased significantly, from 8,493 at the start of 2022 to fewer than 4,950 by mid-September 2024. Additionally, the count of dispensary licenses peaked at 1,243 in early May 2024 but has since dropped to 1,200.

Michigan: Sustained Growth Amid Competitive Pricing

Michigan's cannabis market continues to thrive, with dispensaries selling an average of 89,000 pounds of adult-use cannabis flower per month in 2024, marking a 12.8% increase from 2023. The state boasts approximately 8.7 dispensaries per 100,000 people, compared to California's 3.2 per 100,000, enhancing consumer access. Competitive pricing has also played a role, with the average retail price for adult-use flower hitting an all-time low of $79.70 per ounce in July 2024.

Florida: Anticipating Expansion Pending Legalization

Florida's medical-only cannabis market is projected to surpass $2.1 billion in dispensary sales in 2024, positioning it as the third-largest cannabis market in the nation. The state has more than 886,200 qualified patients with active medical cannabis cards, representing about 4% of the population. The potential for adult-use legalization looms, with Amendment 3 on the ballot. If passed, it could significantly expand the consumer base to all residents and out-of-state visitors aged 21 and older, potentially doubling the market size.

Outlook for 2025: Navigating Opportunities and Challenges

As we move into 2025, the cannabis industry is poised for both growth and challenges. The global medical cannabis oil market, for instance, is forecasted to grow from $2.1 billion in 2021 to $7.1 billion by 2030, indicating a compound annual growth rate of 12.1%.

However, the industry must also contend with regulatory complexities, market saturation in mature markets, and the need for sustainable practices. Emerging markets like New York are showing promise, with sales nearing the $1 billion mark since the launch of its legal market.

In short, while the cannabis industry is on a trajectory of growth, stakeholders must remain adaptable and informed to navigate the evolving landscape effectively. 

For more detailed insights and data, please refer to the sources cited below.

Sources

Written by Joshua Johnson

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