Increased Earnings in the Fourth Quarter
David Mukpo, COO of cannabis-industry brand tökr, predicts a thinning of the herd of marijuana-related brands – and a boost in fourth-quarter earnings among the top contenders of cannabis. “Through the early part of the year, some of the largest cannabis companies struggling will lead to marquee companies closing the door,” explains Mukpo. “As the field narrows, this will be offset by Q4 being the most optimistic time in Cannabis over the previous 24 months as the market factors begin to stabilize.”
Update (July 2023): Industry leader Aurora Cannabis reported a net revenue of $72.1 million in the fourth quarter of 2020 – a net profit reduction of approximately five percent compared to their third quarter.
Better Experiences In-Store
Many experts have predicted improvements in dispensaries’ bedside manner, so to speak, throughout the course of 2020. Embracing technology will help retailers target the individual needs and preferences of their consumers, pairing the the 21st century innovation of recreational cannabis with the best benefits of the co-existing digital age.
FlowHubs CEO Kyle Sherman explains “…as the ‘digital natives’ of retail, dispensaries will embrace the opportunity to build physical stores with a digital-first experience, making them some of the savviest retailers in 2020. Envision customer check-in systems that can tell you, “Shirley likes hybrid gummies,” and automatically apply a special for her on that product that might be expiring soon. The customer and the retailer both benefit. With nuanced data on individual buying habits, dispensaries will start focusing on personalized purchasing and educational experiences to stand out among the growing pack—which is ultimately the future of all retail.
Sasha Kadey, Co-Founder and Creative Director of Higher Standards, echoes Sherman’s assessments. Kadey adds, “as more operators get their legs under them, consumers will have more choice of where to shop and retailers will have to level up to win their hard-earned cannabis dollars in an increasingly competitive environment.”
Vapegate 2.0
Speaking of the JUUL-imitator incidents, more less-than-trustworthy black-market vape brands are due for a reckoning in the coming year. It’s essential to stick with brands you can trust like PAX, PuffCo, and other vape shop industry leaders in-line with clearcut testing and labeling standards. According to Joe Hodas, GoFire’s CEO, “the vaping crisis was a big black eye in 2019. This will course correct, but we’re not done. These issues are going to compound over the next year, and it’s the companies that are already thinking ahead and understanding what the issues are: additives, heavy metals, combustion, that will become, l hope, the saviors of that particular space.”
CBD Will Slow Its Roll
As those who’ve followed recent FDA updates know, CBD has seen increased regulatory efforts in the final months of 2019. These are expected to continue throughout 2020, leveling the skyrocketing growth seen by the industry over the past several years. This isn’t to say that CBD won’t remain a hardselling product – just that the previously unchecked growth will likely level off to meet the increasing FDA stringency.
Aria Brands CEO Micahel Scherr explained the reasoning behind this predicted change. “Additional CBD regulations are on the horizon, and we’ll start to see fewer CBD brands on the shelves that were releasing false information about the ingredients and potency within their products. There’s a chance that the CBD market may become less saturated due to the new regulations, allowing legitimate brands that are FDA and GMP certified to step into the spotlight. Also, as the stigma around cannabis consumption continues to decrease in 2020, companies will start getting creative within the cannabis gifting space, and we’ll begin to see more opportunities for international trade.”
Update (July 2023): According to a comprehensive CBD Market Report from ProjectCBD, “in 2021, CBD sales in the natural channel totaled $38,931,696, a 24% decline. This was somewhat less than the nearly 37% decline seen in 2020. Sales appear to have peaked in 2019, when natural channel consumers spent more than $90.7 million on these products.”
Less TBD from the FDA
One aspect of cannabis-related business that has frustrated many professionals and consumers alike is the ambiguity in regulations and standards from the Food and Drug Administration. While 2019 saw an increase in government-funded testing on cannabis and cannabidiol, 2020 will likely bring even more related efforts in understanding cannabis-derived substances – and effectively regulating them subsequently. This prediction comes from Matt Willse, President and Founder of Resonate Foods. Says Willse, “In the next three months, the FDA may make an announcement erring on the side of caution with regard to CBD in food and beverage. We may see limits in concentration for retail consumer products or something somewhat more restrictive than the policy now. But we don’t believe the FDA will destroy the recreational CBD market.”
A Wider World Unfolding
A broader range of partnerships are expected to unfold and pair with cannabis-related industry leaders. The upcoming SpaceX mission exemplifies this foretelling, as do the variation of hemp-related products featured in our holiday hemp shopping guide. But with the burgeoning cannabis industry steadily rising, the sky truly is the limit. Marijuana Business Daily’s CEO and Co-Founder, Cassandra Farrington, shared her insight on the variations to come. “The areas that will continue to thrive are the emerging industries within the cannabis markets: the international markets, the hemp space, science, and financing. There are still so many opportunities to get into the business. I look at it this way: Is it too late to get into natural pet food? Is it too late to get into construction? No. You just have to figure out what you want your play to be, find your angle, and figure out what’s going to be different about your idea.”