What Will The Cannabis Industry Look Like In 5 Years?
There is little doubt that the cannabis industry—the above-ground, legal(ish) sector anyway—has seen rapid growth as laws and the social stigma surrounding it have started to ease. By one estimate, the global marijuana market could even reach over $146 billion by 2025.
Despite the relative market size for cannabis, the industry is still in the midst of growth and is nowhere near market maturity. The legislative landscape is also in a deep, prolonged state of change, but significant hurdles exist for pot businesses, in particular, federal financial laws that limit access to banking and capital.
Cannabis packaging still has unique challenges as well, as the industry juggles conveying mainstream legitimacy, legal compliance, and sustainability.
So, just in time for 4/20, a date when cannabis users and others celebrate all things sweet Mary Jane, we interviewed some of the best and brightest in the industry and asked them what they think the cannabis industry will look like in five years, especially when it comes to packaging and branding.
Liz Kost, CEO, Purple Line Media
The number one catalyst for the Cannabis industry is going to be banking. Currently, banking with the Cannabis industry is considered high risk making access to capital extremely difficult. Banks and ancillary services like design studios and packaging producers face the looming threat of civil actions, forfeiture of assets, reputational risk, and criminal penalties when processing transactions with a Cannabis company. That means Cannabis manufacturers have to pay for all their packaging costs upfront. Most packaging companies and banks won’t offer lines of credit to Cannabis producers, so all dry goods costs come out-of-pocket before the packaging even hits the shelf. This slows brand growth. Large design studios are also hesitant to work with Cannabis clients for fear they may face push back from their banks. In addition, the current banking situation restricts large corporations from entering the market. Companies like Constellation, are having to invest in Canadian Cannabis brands instead of investing in brands in their own San Francisco backyard.
At the end of March, a congressional committee voted to approve legislation aimed at increasing marijuana businesses’ access to banks. Advocates expect the legislation, which cleared the panel in a bipartisan vote of 45-15, to be considered on the floor within the next several weeks. If the bank safe harbor act passes, the cannabis industry will experience explosive growth. There will be an immense amount of acquisitions of small brands by large US corporations providing those brands with an opportunity for rapid national expansion. Large ancillary businesses will move into the space creating more competition for the current boutique cannabis design studios, but it will also attract more outsiders to start creating brands of their own, and current producers will have more capital which will flood the design and packaging sectors with more work.
Regardless if cannabis is ever federally legalized, if a safe harbor banking act passes, the US cannabis brands would dominate the global cannabis industry.
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Source: The Dieline
Author: Rudy Sanchez