Is Cannabis Having Its 1917 Moment?
1917 will go down as one of the most pivotal years in history. Three major developments occurred in that war torn year, triggering new systems, business models and socio-cultural shifts.
In this momentous year, we witnessed the…
> Assembly Line – Henry Ford pioneered the first assembly line, ushering in the mass production of consumer goods.
> Fountain – Avant-garde French artist Marcel Duchamp created the Fountain (pictured), a revolutionary sculpture that heralded the arrival of modern art, and indirectly, modernism.
> Russian Revolution - Vladimir Lenin led an uprising that quickly turned into the biggest, most radical political-economic transformation in history.
While these were seen as independent events, it took some time to recognize their interrelatedness and true impact.
For cannabis, 2024 may go down in history as its 1917. The following seismic shifts are underway right now:
- Regulatory liberalization
Rescheduling is coming albeit a little late. Weed-friendlier Dems have better than even odds of winning in November. The chances of a positive Florida referendum are good. And tourist-hub Nevada just re-approved consumption lounge permits.
- Industry consolidation & retrenchment
This tough but necessary medicine is well underway in Canada and the US. Many operators have turned the financial corner and are now leveraging deep market, operations and consumer learnings.
- Global growth
Germany saw its medical business roughly double in April on the heels of regulatory reform. Germany’s rec social club experiment is proceeding albeit with hiccups. Let’s not forget newly legalizing Ukraine and pending France (combined pop. of 101M)
Some implications of the 2024 inflection year are-
1. High growth - both domestically (US) and export-led (LPs) - will drive scale economies and innovation;
2. Regulatory standards & practices are beginning to converge (and loosen) across jurisdictions. SAFER remains a tantalizing possibility;
3. The advent of new business models, corporate structures and cross industry/border partnerships will enable new market penetration and capabilities;
4. The emergence of regional appellations such as BC Bud and Moroccan Hash, based on unique terroirs (and adroit branding).
Still, we should not get too carried away. Remember, these are medium term strategic catalysts. They won’t affect every firm, equally. Even large and successful MSOs and LPs need to be careful where and how to compete.
Tempting opportunity is usually accompanied by major threats. Margin compression, scarce capital and hyper competition continue to tax our industry.
Outsiders are also circling. Our large, growing yet undervalued sector will be enticing to shrewd institutional capital or ambitious CPG, tobacco, pharma or tech giants.
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