Posted June 08, 2022
By Ray Blanco
Pot Reigns in its Pullback
We’re a couple of weeks from the start of summer. I expect Americans will take full advantage of the traditional travel and vacation season after the country emerged from COVID-19 restrictions.
The change is affecting marijuana sales, as many cannabis companies reporting first-quarter sales figures show slowed growth, flat growth, and in some cases, even sequential quarterly declines.
States reporting legal cannabis sales corroborate these figures, with small declines evident in some markets, although not all. One example of a fast-growing state is New Mexico. The state legalized recreational pot a couple of months ago. Sales are surging.
The decline in more mature state markets is not totally unexpected. COVID-19 lockdowns meant many cannabis users, stuck at home and possibly out of work, partook of the plant more often than they might normally have done in an open economy.
In addition, consumers flush with stimulus money had an additional incentive to spend on pot. We saw cannabis sales go through the roof when virus-related lockdowns hit the country.
That said, there’s good reason for cheer as there’s still plenty of room for growth, and as cannabis stocks finally arrested their long decline last month.
Moreover, despite the slowing of the industry’s growth last quarter, we’re still way up on a yearly basis over the numbers we saw cannabis companies putting up in early 2021.
Even more important, only 19 states have fully legal recreational adult-use laws, meaning there are still millions of future customers in the other 31 left to tap as the legalization wave crests across the US.
According to BDSA, a leading cannabis research firm, we should see legal sales jump to $35 billion this year, a rise of 22% over last year’s $29 billion figure as the industry grows to a projected $61 billion in sales by 2026.
In the meantime, the big prize lies at the Federal level, with the Senate expected to hold a legalization vote by the end of summer.
To a bright future,
Chief Technology Expert, Technology Profits Daily