What’s In Store For The Marijuana Industry In 2023? Here’s What The Experts Say…
Editor’s Note: For the past couple of weeks, we’ve been telling investors about the major catalyst that investors need to be paying attention to as we head into the 2022 midterm elections.
I’m talking about the issue of marijuana legalization, which is on the ballot in several states.
Make no mistake, this is a critical moment. As our colleague John Persinos puts it, it’s the biggest tipping point in history for canna-business. And that means investors will have a unique opportunity to profit in the coming days.
That’s why John held a special investment Town Hall, called “The Marijuana Millionaire Countdown.”
An archived version of this event is available to view for a limited time. In the meantime, we’re featuring some of John’s insights and expert analysis of this burgeoning industry.
Marijuana Industry Outlook 2023
Amid turmoil in the financial markets, now’s a good time to discern what major players in the marijuana industry predict for 2023. Here’s a meeting-of-the-minds in the fast-growing pot sector. These predictions were culled from media interviews, conference and trade show speeches, and investor presentations.
Curaleaf Holdings (OTC: CURLF) Founder and Executive Chairman Boris Jordan offered two major predictions for the marijuana industry in the year 2023.
The first is that demand for cannabis beverages will grow at a much faster rate than the overall cannabis market. Cannabis-infused beverages currently aren’t a popular subgroup of the industry, but Jordan predicted that marijuana drinks will account for 50% of the market within 5-10 years.
Jordan’s second prediction is that tobacco companies will accelerate their involvement with the cannabis industry.
Jordan predicted that once cannabis is federally legalized, tobacco and cannabis companies will rapidly integrate. “The minute that marijuana gets rescheduled, tobacco companies will be known as cannabis companies,” he said.
Jason Vegotsky, CEO of Petalfast, a California-based sales and marketing agency for the marijuana industry, cites the recession-resistant nature of pot demand. He predicted that marijuana sales and profits will soar in 2023 due to economic insecurity.
“If you look at alcoholic beverages, economic downturns typically do not hurt the industry,” Vegotsky said. “Instead, what we see is the consumer looking for value alternatives. I would expect the same trend in cannabis during an economic slowdown.”
Vegotsky said cannabis consumers will likely continue to buy, but take fewer risks on new products and seek out value-priced cannabis products.
Kevin Bush, chief financial officer of Denver-based Sweet Leaf Madison Capital, explained that inflation could exert dramatically different effects on marijuana businesses from state to state. “Every state is its own story, with a different regulatory structure,” he said.
More mature marijuana markets, such as California, Colorado, and Washington, are in a better position to survive rising inflation and economic downturns. While other states with a newer cannabis culture may lack the infrastructure to survive economic tumult, they also face less competition and a greater guaranteed share of the market, despite overall economic headwinds.
Most of these experts agree that growing tax revenue from marijuana is a major driver of industry growth. Cannabis sales tax revenue across states increased 34% in 2021 from 2020, totaling more than $3.7 billion, according to a recent Marijuana Policy Project report (see chart).
George Mancheril, CEO of Bespoke Financial, a Los Angeles-based commercial lender that partners with cannabis companies, said that cannabis stands out as one of the only industries whereby businesses are experiencing deflation. Mancheril predicts that most companies in mature marijuana markets won’t have an exceptional year but should have the strength to survive 2023.
The general expectation remains that, despite political stagnation in Congress, marijuana is on the cusp of legalization. And yet, it still hasn’t happened.
Because of the failure of the federal government to act, combined with the falling prices of cannabis products and the increased costs of production because of inflation, Mancheril says “it’s probably one of the more challenging seasons the industry has seen. It’s a double whammy.”
Jordan Lams, CEO of California-based retail marijuana purveyor Moxie, explains that the lack of progress for marijuana reform at the federal level is making it harder for companies to find capital.
The cash crunch underscores the need for investors to be selective. Scarcity of new capital favors companies that are already well-funded.
Because of inflation and the economic downturn, cannabis consumers will continue to lean towards purchasing more bargain-priced cannabis products and take fewer risks on new selections, according to Skip Motsenbocker, CEO of California-based cannabis cultivator Pacific Stone.
“We do think consumers will be less likely to try new products and stay with brands they know, like and trust [and also] offer great value for their dollar,” Motsenbocker said.
Irwin Simon, CEO of Canada-based Tilray Brands (NSDQ: TLRY), has made daring predictions in the past, such as his vow to hit $4 billion in annual revenue by the end of fiscal year 2024. Tilray’s net revenue for the 2022 fiscal year was $628.4 million, representing growth of 22.5% over the previous fiscal year. Simon’s prediction leans on the U.S. and Europe following through with legalization.
Simon went further to say that once legalization is cemented, no other cannabis company “will have the assets and the ability to grow and build brands like we will.”
This brazen confidence is in part due to Tilray’s ancillary brands including Manitoba Harvest (hemp foods) and Breckenridge Distillery (cannabis beverages).
Pot prohibition is doomed…
Whether you’re for or against marijuana legalization, it’s coming. The predictions I’ve just conveyed show that marijuana is becoming as commonplace a consumer product as beer and soda.
Fact is, it’s only a matter of time before marijuana is legalized on the federal level. This seismic event would unleash a tsunami of marijuana profits.
Editor’s Note: The legalization of marijuana offers a major opportunity for savvy investors. But it’s important to do your homework first — and that’s where John comes in…
During his special investment Town Hall, John revealed the one simple marijuana trade that could dump piles of cash into your brokerage account, before the midterm votes are even counted. An archived version of this event is available to view — but only for a limited time.