Cannabis Grows Up: How A Maturing Industry Moves Beyond Its Grass Roots Origins In 2023

The cannabis space is changing. Across the country, states are passing legislation that either substantially decriminalizes marijuana or makes it fully legal, and cannabis has therefore never been easier to access. For this reason, cannabis retailers and brands are changing how they approach their target markets – and those target markets are changing, too. It might mean that investors should change how they view the industry, as well. 

These changing attitudes have more subtle consequences. Because cannabis is more accessible, more people are exposed to it, which means the old stigmas and stereotypes are gradually dying off. Hippie regalia and incense-filled rooms worked fine as marketing tools when the only customers of the industry were hardcore stoners, but as cannabis grows in popularity among programmers, doctors, lawyers, soccer moms, and everyone else, a more modern approach becomes appropriate. Education has also improved dramatically; though many still think of cannabis as a psychedelic and don’t realize its range of medical benefits, that is beginning to change.  

Shifting regulatory tides and broader markets are ushering in a new era for cannabis businesses–with accessibility encouraging growth and ultimately leading to change. Business outside of the cannabis industry, such as equipment suppliers, have found success in pivoting toward grow operations and dispensaries. Legalization, it is clear, has broadened the market beyond the plant itself. 

This is cannabis, redefined – and refined. 

The Basics Of Cannabis That Every Investor Must Understand 

Understanding the cannabis market is crucial for investors who want to profit from the "green rush.” With that in mind, let’s discuss a few of its broad structural characteristics.

First and foremost, the cannabis market is a market, and therefore shares important similarities with other consumer markets. Among these is the fact that current trends steer supply and demand. By tracking major technological changes, the shifting regulatory landscape, attitudes among cannabis users, and advances in things like seed genetics or horticultural science, you can do a better job of forecasting future market conditions. This information will help you build your investment strategy around where things are going, not just where they are now, and that will allow you to stay relevant and growing.

In cannabis, as in other industries, there is no substitute for understanding the audiences’ wants and needs. Henry Ford is supposed to have said “If I had asked my customers what they wanted they would have said a faster horse.” The authenticity of this quote is a matter of some debate, but it captures an important truth: The most successful businesses are able to create new categories of demand, offering something to customers they didn’t even know they wanted. Three primary things – understanding the trajectory of the industry, anticipating customer wants, and adapting to growth – are the keys to building a successful cannabis operation as well as important dynamics that investors need to understand. 

And of course, as cannabis companies become more sophisticated, they begin to encounter the same problems every other enterprise does as it scales. First, businesses must recruit more seasoned business and retail professionals. Second, they face the need to adopt new technology to lower costs and streamline efficiency. Finally, they must create more standard operating procedures.

Why Cannabis Is A Good Investment  

There is still a lot of money to be made in the cannabis space while the industry matures and becomes more sophisticated. As more states move toward recreational legalization, barriers to innovation are being removed, and that means more market opportunities are opening. Both grow operations and dispensaries still need capital, as running these businesses without outside financing is costly. By bringing on investors, cannabis entrepreneurs are left free to focus wholly on their product or service. Higher quality will lead to higher demand and better returns for everyone involved. 

And there are no signs that the market is reaching saturation. U.S. sales reached 25 billion in 2021, a figure which is projected to hit $57 billion by 2026, so it is clear there is plenty of room to grow. There is also reason to believe that the structure of the cannabis market is uniquely suited for small- to medium-sized investors. Because cannabis is still illegal at the federal level, many bigger investors simply do not want to get involved in the industry, leaving room for less well-heeled competitors to blaze new trails. But above all, it is important to remember that investors must be prepared for the long haul, as overnight success in the space is not as common as it once may have seemed. Still, the future of the industry is very promising.

Like so many of its customers, the cannabis industry has grown up, trading its tie-dye for a suit and tie. It is now a thriving industry with serious companies, real investors, and world-class talent. For anyone seeking a dynamic and ascendant space in which to invest would be wise to look or take a second look at cannabis. With stigmas disappearing and favorable legislation being passed across the United States, there has never been a better time to build a “green” portfolio.