Cannabis is a therapeutic plant with a thousand health benefits, only if consumed in limited amounts. It tends to treat cancerous cells, fight off depression and anxiety, and many more. Gradually, the cannabis industry is witnessing legalization in many parts of the world. There was an act passed in 2020, known as the HEROES Act, to enable banks to grant services to the companies involved in the positive growth of cannabis. The House of Representatives passed it into the Safe Banking Act and Senate.
The legacy is likely to cannabis marketing, production, cultivation, and trade in the market. There has been a visible increase in medical and therapeutic marijuana farms. The cannabis industry is divided into different categories. Based on type, the two categories are concentrates and flowers. Based on its application, the cannabis industry is segmented into industrial hemp, recreational, and medical. If the region is considered, the cannabis industry is widely distributed in Europe, North America, Asia-Pacific, and the remaining parts of the globe.
The estimated size of the cannabis industry was around USD 20.47 Billion in 2020 and is estimated to grow at a CARG of 32.04% as its value was USD 28.266 Billion in 2018 and is expected to reach USD 197.74 Billion by 2028. This shift has many reasons, like marijuana’s medicinal benefits, enabling policies, legalization, and relaxation of regulations. However, the rising awareness regarding its benefits is the sole reason for its enhanced sales.
Do you still imagine cannabis as a powdered medicine? Well. You can eat it in the form of candies, chocolates, and vibrant beverages, which is quite amazing and tempting. So, these manufactured products allow you to enjoy the substance for one to two hours. The capability of cannabis to treat AIDS, cancer, arthritis, mental dysfunctions, anorexia, etc., has increased its popularity in the medical industry. After the relaxation thing, the demand is going higher and higher.
Though there are multiple optimistic reasons for the growth of the cannabis industry, the industry is expected to witness certain holdbacks this year due to various following reasons.
Challenges To Cannabis Industry In 2022
1. Cannabis Industry: An Ever-Changing Landscape
The cannabis industry is flourishing quickly, so relevant business owners must undergo quick and complex processes to adapt to it. The main challenge is that different countries in the US or across the globe see varying cannabis legacy, use, and distribution laws. With the industry’s growth, the big companies are also trying to expand their foothold. The investment from other industries into the cannabis industry is also widely increasing. Addictive industries are heavily invested here, including tobacco, alcohol, and pharmaceuticals. These are trying to sell off cannabis at their prices. It can offer a drastic challenge to the cannabis industry.
2. COVID-19 Pandemic’s Effects
It’s nothing unusual that the pandemic has affected the cannabis industry, too, like almost every other. Covid took a toll on almost everyone’s mental health. It increased the sales and consumption of cannabis. Almost 53.2 million cases of depression and 76.2 million cases of anxiety were reported in a study by The Lancet in October 2021. Then a study was published in the Journal of Addictive Diseases in September 2020 that hinted at the rising use of cannabis drugs. Since the pandemic, the sales of the cannabis industry have boosted by 91%. But slowly it declined down. A study conducted on adolescents showed that there wasn’t any big drift, and the perceived availability of marijuana has declined.
3. Recreational Legalization Of Cannabis In The US Market
North America is known for dominating the cannabis industry, especially after its legalization in the US. Now, you must be wondering how it is a challenge then. First, there’s still limited legality that exists. A survey was conducted some time back, where 60% of people opinionated it to be legal for recreational and medicinal use, whereas 31% wanted it to be legalized only for medical usage.
4. Banking Limits
Though the cannabis industry has witnessed a lot of relaxation, it still faces certain banking limitations. The government has yet to lift banking restrictions regarding the cannabis industry and various companies. The SAFE Banking Act doesn’t permit federal regulators to penalize financial institutions for various state-level cannabis-related business opportunities. Now, you must be thinking that the act has passed already; yes, it did almost five times but was never passed through the Senate.
5. Increasing Interest Rates
The cannabis industry and cannabis marketing are legalized sometime before, so it is still a budding industry. Similar to any other young industry, the cannabis industry needs to work on raising its capital for future growth. Its legal status restricts it from enjoying banking services like other industries. Hence, raising capital is an issue here. In addition, low-interest rates have made costs expensive in recent times. The practice of the Federal Reserve planning to raise interest rates by three times by this year’s end can offer big challenges to the cannabis industry.
The cannabis industry is growing and is becoming more accepted in society. Still, it faces many challenges to market products and services. There are effective cannabis marketing ways to tackle those challenges. Changing trends and rapid expansion in the cannabis industry and cannabis marketing tend to create a volatile and fluctuating ambiance for investors and cannabis companies in 2022. One of the major challenges is for investors in deciding the score of startups, and IPOs, whereas for big cannabis companies, it’s a great time to uplift the growth of their products and earn profits.