It seems the world has become highly political over the last five to ten years. One can barely bring up a topic for discussion before it devolves into politics. That is often the case when cannabis is the subject. People cannot wait to talk about what this state is doing or how Congress might get a reform bill to the president’s desk. Yet there is a lot more to the industry than that.
Like it or not, cannabis is now a legitimate business. It is only a matter of time before Washington decriminalizes it and begins regulating it like alcohol. Almost everybody in the industry knows this. You can bet they are not as worried about the politics of the situation as cannabis users and activists. They see the writing on the wall.
That being the case, there are three big things the industry needs to worry about – above and beyond the political:
1. Public Perception
Public perception plays a huge role in the state of the industry. If not for activists aggressively seeking to change public opinion, we wouldn’t have thirty-seven states with legalized medical cannabis programs. There would not be another eighteen that allow recreational use. Most states with legalized cannabis got there through a voter referendum. The thing about referendums is that they are all about public perception.
Knowing that, the industry always needs to be cognizant of current public perceptions. Everyone from growers to retailers need to be careful to not do anything that will turn the public against them. Otherwise, all the work done to legalize cannabis could be undone. Then the industry would have to start over and rebuild the trust.
2. Market Forces
The ultimate equalizer in any industry is the market. Strong markets produce winners. Weak markets can turn those same winners into losers. Right now, the cannabis market is extremely strong. It is worth billions annually. But there is a catch: in most states, the black market still generates more revenues than the legal market. The industry is constantly battling to get itself on a level playing with black market operators. To the extent they fail or succeed, they influence the future of their own businesses.
Market forces are strongest at the state level right now. That is bound to change when Washington finally gets around to decriminalization. When that happens, companies will be competing from coast-to-coast.
3. Medical Innovation
Despite more than three-dozen states allowing medical cannabis, fewer than two-dozen have given the green light to recreational use. In the absence of federal decriminalization, do not expect the majority of states to get on the recreational bandwagon. Americans are very accepting of cannabis as a medicine. Not so much for recreational use.
This suggests that medical innovation could have a significant impact on the industry moving forward. In Utah, where cannabis can only be legally used as a medicine, one of the goals is to eventually have a medical cannabis program that operates nearly identically to the system that regulates every other prescription drug. Utahmarijuana.org says the state is wholly committed to developing the best medical program in the nation.
Other states have a similar goal. This is good because it creates competition and spurs innovation. It could be that medical innovation eventually takes over as the dominant factor in the industry, relegating recreational use to something people barely talk about. Not that they will stop using recreationally, but the industry’s focus will be on medical innovation.
Cannabis has become a lucrative industry with a lot of players. And they are not being driven by politics. They are being driven by economics.
