National and global legalization expansion and an influx of investment capital are generating explosive growth in the cannabis industry. In fact, the cannabis market is one of the fastest-growing global markets. However, COVID-19-related impacts are still creating challenges for cannabis companies in 2022.
The cannabis market faces dynamic shifts thanks to ever-changing regulations and supply-chain disruptions. Ongoing lockdowns, shipping delays, and production disruptions are creating widespread supply-chain issues.
Cannabis companies have to anticipate some of the biggest challenges for the cannabis industry if they want to be successful. So let’s explore the biggest challenges facing the cannabis industry this year as well as the ways your company can overcome these hurdles.
Cannabis and COVID-19
The psychological stress of pandemic isolation contributed to an increase in cannabis use over the last two years. Studies show that many individuals are using cannabis to activate cannabinoid receptors and support emotional regulation during these turbulent times.
In fact, the U.S. is expected to generate $32 billion in cannabis sales in 2022. Last year, the U.S. did $26.5 billion in cannabis sales. If the trend continues, the market will exceed these predictions. The pandemic-promoted increase in cannabis demand is great news for cannabis companies, but the aftershocks of the pandemic are complicating compliance and bottlenecking production.
Cannabis use is becoming more widely accepted across the U.S. and internationally. As of June this year, 38 states have legalized cannabis for medicinal use. In addition, according to U.S. News & World Report, 19 states have legalized recreational marijuana use. But, because legalization in the U.S. varies by state, navigating the U.S. market can be very complicated for emerging cannabis companies.
While many American companies have begun lobbying for wider-scale legalization, the issue remains relatively politicized. For instance, cannabis companies face pushback from banking restrictions. As a result, most cannabis companies cannot work with federally-insured banks. The cannabis market faces challenges with generating investment capital or borrowing funds.
This issue can create adversity for cannabis start-ups trying to secure funding and for enterprising businesses hoping to expand. So, the cannabis market will have to get creative with sourcing funds in 2022 if companies want to sustain growth.
Impending Interest Rate Hikes
Cannabis companies face more hardships than other industries when it comes to securing funding. And the Fed recently raised the interest rate to the highest rate in nearly 30 years. This spike will make procuring start-up capital even harder. These financing challenges may require cannabis companies to find new investors for generating start-up capital.
Cannabis Supply-Chain Issues
The pandemic has proven that many people see the positive benefits of cannabis use for mental health. However, COVID-19-related supply-chain disruptions stifle companies’ ability to meet consumer demand.
Sourcing high-quality manufacturers capable of dynamic production shifts is essential for continued success. Cannabis companies have to be flexible if they want to navigate the production hurdles created by ongoing pandemic-related shutdowns and the resulting inventory delays.
Changing the Stigma
Outdated stereotypes of cannabis users present a marketing challenge for cannabis companies. However, expanding your target market is possible as long as your messaging and packaging are on point. For example, a recent North American study found that the typical cannabis user is actually a health-conscious woman.
These findings are a sharp deviation from the stereotypical cannabis consumer like Willie Nelson or Cheech and Chong. The diversity of cannabis customers presents untapped market potential. And market-research-driven companies can use these findings to pivot their messaging and packaging to a broader subset of consumers. Educating potential customers about the health benefits of products and how items are sourced can support this goal.
Shaping the Cannabis Market in 2022
Continued growth and untapped potential make the cannabis industry an exciting market sector to invest in. However, continued legalization hurdles and pandemic-related supply-chain disruptions create challenges that companies must overcome if they want to succeed.
The Calico Group is a global supply chain management firm that helps cannabis companies reach their full potential. As a leading cannabis supply chain and logistics company, we have created innovative solutions for a multitude of clients. With offices across the nation and the globe, our team rapidly designs precise solutions for problems with sustainable long-term growth in mind.
Results-driven adaptability is at the heart of our operations. We guide cannabis companies through turbulent market fluctuations and create effective strategies for lasting growth and success.
Learn how our team can help you overcome the biggest challenges for the cannabis industry in 2022 and make this your best year yet.