Cannabis businesses are on the rise as public opinion continues to shift and stigmas around cannabis dissolve. With the legalization of recreational marijuana in the U.S., more scientists and analysts are entering the field to learn more about cannabis. The money is also flowing in and big cannabis businesses are acquiring smaller competitors. This is great news for cannabis businesses but not so good for smaller players, who need capital to survive and often have few options.
The growing demand for legal cannabis is driving growth in many different industries. The industry is growing year-over-year and more markets expect to open in the coming year. Last year, cannabis sales including marijuana seeds for beginners in the U.S. increased by 46 percent. The legalization of cannabis allows for a greater acceptance of cannabis as a medicine. It also leads to new industries opening up, such as medical marijuana.
Some of these businesses require a variety of different skills. For example, marijuana dispensaries are complex retail operations. As such, they require experienced management. Many owners actively recruit qualified individuals with experience in retail and customer service. Some even seek people with a background in pharmacology. Managers earn well and are typically given health insurance and paid time off. Those who manage multiple stores can earn six-figure salaries.
Legalizing recreational marijuana for adults will boost the economy and create hundreds of thousands of jobs. It will also free up police resources that are already struggling. It will also put an end to the huge racial disparities in marijuana enforcement. Furthermore, legalizing marijuana will reduce street crime, take business away from drug cartels, and make marijuana use safer through testing.
While legalization is not yet widely supported, there are some states that have passed legislation that makes the substance legal. For example, in West Virginia, SB 386 legalizes the use of medical marijuana. The federal government still considers recreational marijuana illegal under the Controlled Substances Act of 1970. However, more states are likely to legalize the substance, partly because of tax revenue it brings to state governments.
The COVID-19 pandemic has devastating effects on the cannabis supply chain. While many cannabis companies remain largely unaffected, some have been forced to close operations or slash their staff due to shortages. This results in product shortages and prices rising.
This outbreak has disrupted the global supply chain. With this came the closure of some facilities, reducing production, changing transportation routes, and delaying shipping. There are also fewer supplies available as many workers have become ill. In addition, cannabis products are now stocked by consumers for extended periods of time, which has impacted the industry's supply chain.
Despite this negative impact, the cannabis industry remains optimistic about its future. Congress is currently debating comprehensive cannabis reform legislation to remove cannabis from the schedule of controlled substances and regulate the industry federally. Another important piece of legislation is the Secure and Fair Enforcement Banking Act (SAFE Banking Act). This legislation would provide a safe harbor for banks and other financial institutions that work with cannabis businesses.
As the cannabis industry continues to evolve, more companies are considering exit strategies. However, some key considerations should be kept in mind when approaching a potential buyer. In this article, we will examine some of the most common challenges faced by cannabis companies as they prepare for M&A transactions.
One of the biggest hurdles is obtaining regulatory approvals. While it is possible to acquire a license without regulatory approval, most cannabis M&A deals require regulatory approval. This complicates the process and may increase the diligence cost. In addition, sellers with conditional licenses may lack the capital they need to continue operations. Consequently, the buyer may have to incur significant build-out expenses.
Another challenge facing cannabis companies is the state-by-state regulatory environment. As a result, companies are often limited to the states in which they are licensed. This makes it difficult for companies to expand their presence beyond their home states. However, the right M&A deal could give cannabis companies a national footprint.
In the world of marijuana, social media is an integral part of marketing. However, marketing campaigns must be both measurable and target the end-user. As such, cannabis marketers must focus on ensuring that their interactions with social media users are the beginning and ending points of a relationship. For example, Adelia Carrillo runs a Facebook group with a 59% growth rate and a 94% signup rate for newsletters. This type of relationship is often fragile, so cannabis marketers must be aware of how to make their social media interactions count.
Another concern with social media for cannabis businesses is the influence it has on the youth market. As youth use digital media on a regular basis, these ads can influence their perceptions of cannabis use. Consequently, prevention specialists and health practitioners should be aware of the impact of cannabis marketing on the youth population. The ability to recognize and understand the effect of cannabis advertising can help them educate and engage youth in critical thinking about cannabis.