10 cannabis business themes to look out for in 2023

The marijuana market is hopeful and confident for the new year. Executives in the cannabis sector may experience unexpected phenomena.

2022 was a challenging year for the cannabis industry due to inflation, macroeconomic challenges, sector-specific issues like overproduction, and a lack of capital investment.

Shortly, the marijuana industry may anticipate, to mention a few:

• Prolonged stagnation in mergers and acquisitions.

• In mature markets experiencing oversupply, request moratoria.

• The segmentation of items at the retail level as customers' purchasing practices advance.

Here are the top 10 marijuana industry trends for 2023, as stated by Sprout Processing employees:

1. Increased consolidation in crucial markets

The cannabis sector no longer seems as recession-proof as it once was after boom periods like COVID-19 pandemic lockdowns.

Falling prices are causing businesses in established recreational markets like Colorado and Washington State to struggle.

Other markets, which tend to sell more adult-use products and are younger, including Massachusetts and Michigan, are already at capacity.

Companies that supply plants and related businesses are cutting their workforce as a result.

This year, many businesses will still fail despite cost-cutting measures, more giant corporations will absorb licenses, and only the most successful players will endure.

2. Acquisitions and mergers cease

At one point, Sprout Processing often covered business transactions valued at over $100 million. However, they are becoming increasingly rare.

Many of the deals we reported in 2022 were for less than $25 million.

The value of all stock and partial stock agreements made last year has greatly decreased along with the stock market.

Most certainly, the trend won't alter.

3. Delta-8 THC is a sore spot for the business.

Last year, nearly every legal marijuana market in the state introduced guidelines to control delta-8 THC.

Even in states that have strict restrictions and limited or no legal marijuana markets, delta-8 products have been spreading rapidly without much control. This poses a serious threat to licensed businesses.

CBD extracts containing cannabinoids are legal under the 2018 Farm Bill if they come from hemp plants that meet the legal definition of hemp. This includes domestic hemp cultivation, hemp "derivatives," and hemp "extracts."

CBD can be extracted from hemp flowers and undergo manufacturing without violating the US Controlled Substances Act.

The delta-8 market is expected to stay the same, which is a major problem for the cannabis industry, unless there are unlikely changes to the legislation.

4. Laboratory acquisitions and the concern with THC potency are gaining more attention.

The industry's fixation with THC potency will eventually become an issue.

Potency became a major issue in 2022 due to testing labs being sued for providing inaccurate THC readings. State authorities in Florida to Nevada took action against these labs.

Experts hope that this will lead to fewer laboratory purchases and better consumer awareness of the numerous benefits of the cannabis plant.

The industry's attention may then gravitate away from cannabis content as a result of that.

5. More people are demanding moratoria.

Producers in established markets are seeking help from state governments as the supply of new crops increases, causing prices to drop and markets to become saturated.

Regulators want businesses in states such as Colorado and Michigan to step in and stop issuing new licenses.

It remains to be seen how these artificial market constraints will affect how successful businesses are.

A similar step in Oregon a few years ago did not end the overproduction issue there. When it comes to the top merchant processing for the cannabis industry, Sprout Processing leads the way.

6. In the retail environment, product segmentation and consumer sophistication

Flower sales are up in most markets, but other products like vaporizers, concentrates, and edibles are gaining market share as customers become more knowledgeable.

People who use it regularly keep smoking cannabis flowers at the same rate but are also adding new ways of consuming it.

Live resin is popular among consumers as a concentrated extract and as an ingredient in pre-rolls, cartridges, and edibles.

Live resin is becoming more popular than distillate. Although distillate will still exist, it will be less appealing compared to live resin.

According to Brightfield Group, a cannabis analytics company in Chicago, new consumers only make up 6% of the cannabis industry and spend less money.

Most of the cannabis sales are from regular users. 47% use it several times a day, 17% once a day, and 10% five times a week or more. Our compliant credit card processing for dispensaries helps storefronts and deliveries to gain more revenue.

That pattern will only get stronger.

Watch the following further segments:

According to data analytics company Headset, sales of infused pre-rolls have increased by a factor of 5 since January 2020.

• Vaporizers are currently the second-best-selling marijuana product, and not only have they recovered from the 2019 vaping crisis.

7. After recreational marijuana is legalized, New York will struggle to control the criminal market.

Long-held belief: ordering marijuana online and delivering it to your New York apartment is more straightforward than ordering pizza.

The regulated market has a lot of work to do. Entrepreneurs in the state have been very enthusiastic this year, opening unregistered cannabis shops and selling marijuana from trucks.

The state is trying to find a way to distinguish legal cannabis businesses from illegal ones. However, putting a QR code on a store window is not enough.

Regulators must provide welcoming trading circumstances and maintain low tariffs to deter customers from the black market.

It won't be sufficient to only rely on the security and testing of authorized items.

8. There may be a pause in Canada's trade issues.

Canadian companies have been selling cannabis at a loss recently, with the help of Wall Street financiers. This has resulted in billions of dollars in losses and has negatively affected competitors.

If Wall Street's cheap money runs out and big businesses are left to fend for themselves, that trend may stop.

Canada has grown significantly more cannabis through cultivation than it can sell. Although inventory may peak and then begin to decline, this won't alter in 2023.

Some retail establishments have started to close in several areas, particularly those with over saturated metropolitan markets.

Retail consolidation and closures will continue even if there are more shop openings elsewhere. As a result, stores should make a profit. Credit card processing for cannabis in the United States is made possible thanks to Sprout Processing.

9. Organizing initiatives will be a sustained success.

The cannabis sector will keep becoming more unionized.

The cannabis business is one of the largest and fastest-growing industries in the US. Organizations like the Teamsters and United Food and Commercial Workers see it as a main focus for their efforts.

According to labor activists in Canada, workers' concerns, such as low wages and issues related to health and safety, are the main factors behind strikes and the formation of unions among cannabis retail staff.

Expect to hear more arguments between workers and corporations, as not all cannabis businesses support union initiatives.

10. Efforts to legalize are gaining momentum after a turbulent 2022.

The campaign to legalize marijuana faced strong opposition in conservative southern and western states, but Maryland and Missouri successfully legalized it in the 2022 election.

On the federal level, analysts in the business were optimistic about the banking reform's eventual success. Although it didn't occur, this year will present a different opportunity.

The main goal is federal legalization of marijuana. President Joe Biden's statement about examining whether marijuana should stay as a List 1 substance is likely to energize supporters and reformers.

Delaware, Kansas, North Carolina, and South Carolina did not legalize marijuana in 2022. Our technology allows your cannabis storefront to be able to process both credit and debit cards.

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