There’s no question cannabis businesses are going through a challenges in 2023, but many are still optimistic about what the future holds and see a shifting of momentum in 2024 as regulations evolve and the hype of the Green Rush wears off.
Marijuana Venture spoke with more than two dozen entrepreneurs and operators in the cannabis space to get their predictions for 2024. Part 2 of this four-part series will cover the challenges and opportunities that remain for surviving businesses.
Part 1: Consumer trends
Part 2: Challenges and opportunities
Part 3: Political movement
Part 4: Business operations
CHALLENGES
“Retailers will have to work even harder to grow and retain their customer base. I expect continued price competition as the market matures and consumers will continue to evaluate different dispensaries as they become more familiar with products available in the market. I would also expect that we will see our first retailer closures in Vermont before the year-end.”
RUSS TODIA
CHIEF OPERATING OFFICER
“The cannabis industry will continue to face growing pains because of federal prohibition and the existing unregulated market. President Joe Biden greatly increases his chance of re-election if he legalizes cannabis federally. We just spent a few months in Canada where the benefits of federal legalization are clear: businesses can actually have bank accounts and ship their products across the country and sell in any province.”
SETH MISTERKA
CO-FOUNDER
“We expect to see a contraction of the legal market in California as retailers and suppliers cease operations or leave the state. We have experienced this with several brands, who have chosen to stop operating in California because of the never-ending black market, compliance costs and competition from the oversaturation of licensed businesses.”
LAUREN FONTAIN
CO-FOUNDER
“Even if rescheduling occurs and 280E becomes irrelevant, the compliant cannabis industry will continue to be capital constrained for both equity and debt. The persistent stalemate for the full legalization of cannabis sales and consumption on a federal level, or even opening conventional banking opportunities for the industry, will continue to drag on and are not likely to be resolved in a presidential election year with a divided U.S. Congress. In addition, persistently high interest rates precipitated by the Fed’s ambitions to tame inflation will continue through the year, although there may be a continued pause in additional rate increases. This results in unavoidable higher rates for the cannabis industry exacerbated by continued federal restrictions on its normalization.”
ANDREW KAYE
CHIEF COMMERCIAL OFFICER
“There are volatile market dynamics in terms of supply and pricing from state to state, and I anticipate that it will become increasingly difficult for cannabis businesses to scale with recessionary threats looming creating a tighter financial environment for businesses and consumers alike, especially within a relatively discretionary spending category like cannabis.”
BRITTANY HALLETT
EXECUTIVE VICE PRESIDENT OF MARKETING
“California continues to be a challenging environment to operate within. We are seeing some submarkets begin the licensing process to allow cannabis operators a path to licensure. This should provide some nominal level of market growth for the state over the coming year. The more mature markets, however, are continuing to deal with added pressures to issue additional licenses within their jurisdictions, effectively splitting market share between a larger number of operators and bringing revenues down to potentially unsustainable levels. The mature markets are expected to continue to become more saturated for the foreseeable future.
Taxation is still a disaster in California. A material number of operators are flat-out not paying taxes while others are taking advantage of theoretical tax loopholes as the California Department of Tax and Fee Administration works to close them. With only a small segment of the market participants current on taxes, it begs the question of when the state will act.”
ED SCHMULTS
CEO
“The industry shouldn’t count on federal legalization to happen in 2024. Billions have been spent on infrastructure at the state level, and I don’t think that will change anytime soon. If it does, then states where cultivation is challenging, like Michigan, will have to compete with California, which could wipe out markets due to the cost of operations.”
ALI GARAWI
CO-FOUNDER AND CEO
“I think the overall rollout of the equitable CAURD (Conditional Adult-Use Recreational Dispensary) program in the state of New York will be one of the biggest hurdles to overcome in 2024. So many folks have been patiently waiting for their opportunity to open, and lawsuits and injunctions got in their way. Many folks have been affected by the small number of open licensed dispensaries, and even more by product that has gone to waste. I hope this can be resolved in 2024. Another hurdle New York has to overcome is the oversaturation of illicit dispensaries, which make it hard for legal dispensaries to operate to their full potential.”
SASHA NUTGENT
RETAIL MANAGER
INDUSTRY GROWTH
“2024 looks promising for the industry, especially as more states legalize in the Midwest and East Coast regions. CPG brands are expected to drive innovation, developing products that cater to a broad range of consumer tastes, with minor cannabinoids becoming increasingly important in their diverse product lines.”
CHRISTINE SMITH
CEO
“Colorado’s cannabis industry, facing an 11.5% sales drop in 2023, anticipates a rebound in the second half of the year due to market corrections and economic improvement. In addition, cannabis consumers in the state that long eschewed cannabis-infused beverages will finally embrace the product.”
BETH KOTARBA
CHIEF OPERATING OFFICER
“We will see new state programs beyond just New York. Maryland’s adult-use lottery, Delaware’s adult use implementation, Alabama’s new program, Georgia’s expansion and Washington, D.C.’s medical overhaul. These markets should be very attractive to operators, and if North Carolina gets to the finish line with a program, the Mid-Atlantic could be huge for 2024.”
OF COUNSEL
BAKER DONELSON (BALTIMORE)
“The European market development will exceed expectations with Germany leading the way, expanding prescribing doctors fourfold by reclassifying cannabis from a narcotic to a prescription drug.”
ARTHUR DE CORDOVA
CO-FOUNDER AND CEO
“2024 will be about the survival of the fittest, it’s that simple. Those cutting corners to make a quick buck will not withstand the pressures and pain points the industry is experiencing. Those of us who have taken the more measured, slow and steady approach and built firm foundations, done things the right way, will be rewarded.”
JEREMY ZACHARY
CEO
“Cannabis consumption lounges in Nevada faced delays in 2023, but ongoing developments signal an exciting year ahead. Deep Roots Harvest aims to launch lounges in 2024, anticipating a lively cannabis scene in Vegas, attracting an entirely new clientele.”
JON MARSHALL
CHIEF OPERATING OFFICER