Cannabis Had a Rough Year, but There Are Bright Spots in 2023

Federal legalization is still unlikely even as more markets open at the state level.

The cannabis industry had a challenging year in 2022, but there is promise in the year ahead. 

The good times were rolling during the during the height of the pandemic as stoners, flush with cash and at home due to social distancing measures, pushed sales, and stocks, to new heights. 

But as the world has emerged from the dark times, and stimulus check-funded savings have dried up, cannabis companies have dropped back down to earth. 

And then some. 

For 2022, AdvisorShares Pure Cannabis ETF  (YOLO) – Get Free Report, ETFMG Alternative Harvest ETF  (MJ) – Get Free Report, AdvisorShares Pure U.S. Cannabis ETF  (MSOS)  — three of the biggest cannabis ETFs — are all down more than 70%

Such a large drop suggests that there are a lot of macro factors weighing the industry down systemically.

What’s Weighing Cannabis Down

The biggest issue for the cannabis industry in the U.S. is the fact that it is illegal federally, and that fact likely won’t change anytime soon. 

With that illegality comes banking hurdles designed to stifle products that are prohibited by the government.

The SAFE Banking Act, which would allow the cannabis industry to have the legal access to the banking industry that it needs, has been a political football for a while.

“There is significant political posturing happening around SAFE banking,” Matt Hawkins, managing partner of Entourage Effect Capital told TheStreet.

States See Falling Pot Prices

Wholesale cannabis prices in California are down by as much as 95% since voters legalized the recreational space in 2016, according to an SFGate feature with interviews with over a dozen farmers.

The group said they used to get as much as $2,000 a pound for their crop wholesale in 2016. In 2022, the group says they are “lucky to get” $400. 

While most industry watchers and economists have predicted that legalization would cause prices to fall naturally, the amount of the fall has hit farmers in the state hard.

Northern California’s Emerald Triangle growing region, which includes Mendocino, Humboldt, and Trinity counties, is famous for the quality of weed it produces. But the region has been especially hard-hit by falling prices.

In Humboldt County, 60% of farms have closed down since the state legalized recreational cannabis in 2016, according to SFGate.


States Starting Up Their Cannabis Businesses

It hasn’t been all bad for the cannabis industry in 2022. This year has been a strong year for individual states finally allowing the sale of recreational marijuana. 

In December, a couple more states officially cut the ribbon on their recreational businesses and another announced plans for the top of the year.

Rhode Island began adult-use sales to those age 21 and older on Dec. 1.

In Missouri, this week marked the beginning of adult-use recreation cannabis sales in the state.

Missourians of age can now legally possess up to three ounces of marijuana and can grow up to six plants. December 8 also marked the day where Missouri’s courts would begin the process to expunge the criminal records of 565 people who are on probation or parole for felony marijuana offenses.

Meanwhile, Connecticut announced that adult-use marijuana sales will launch in January.

Maryland also started its recreational program in 2022.

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