After a year that marijuana entrepreneurs called the "watershed moment" for the state-regulated cannabis industry, 32 states now have either adult-use or medical marijuana laws on the books. But if 2016 was a tipping point for the industry's explosive expansion and positive growth, entrepreneurs and investors are walking into the new year with uncertainty as President-elect Donald Trump prepares to take the White House, says Steve DeAngelo, founder of Oakland, California-based Harborside, the country's largest marijuana dispensary.
DeAngelo says the industry does not know how President-elect Trump and his administration will handle the cannabis industry, thanks to the "many different voices" and viewpoints members of his team have around the plant, from the billionaire founder of PayPal Peter Thiel, who has invested in marijuana companies, to Republican senator of Alabama Jeff Sessions, who is a staunch opponent of legalization. The industry made $6.7 billion in nationwide sales in 2016, according to market research firm ArcView, and investors poured in more than $1 billion in capital, according to Viridian Capital Advisors, so a lot is at stake, says DeAngelo.
"If 2016 stood alone and not connected to the year ahead, we would be growing this industry and movement more robustly. The general election results throw some uncertainty on the growth," says DeAngelo. "My hope is that for guys like Jeff Sessions, their respect for states' rights will outweigh their ideological commitment to cannabis prohibition. That is my hope, but we are likely to see a slowing or stopping to federal reform."
The slowing of reform, DeAngelo says, will be due to the fact that the industry will be in wait-and-see mode until Trump gives a clear indication of how he and his administration will deal with marijuana. In addition, DeAngelo says marijuana is not a top priority for Trump, who has many promises he is expected to make good on first before moving to drug-law reform--build a wall between the U.S. and Mexico, win the war on terrorism, reverse years of market forces, and bring back factory jobs.
"Once they get done thinking about immigration, then deal with terrorism, then build a wall and deport millions of people, maybe they might worry about cannabis," says DeAngelo.
Brendan Kennedy, the co-founder of Peter Thiel-backed Privateer Holdings, which owns various marijuana companies like Marley Natural and Canadian pharmaceutical-grade cannabis producer Tilray, agrees that the industry will be "operating in a period of increased regulatory uncertainty" for the time being. But the eight states that legalized some form of marijuana will be implementing state programs, including California and Nevada, which will act as influencers to the rest of the country, he says. Looking abroad, Kennedy says, Canada should become the first world power to legalize recreational cannabis at the federal level. Germany will become the second nation to legalize medical cannabis at the federal level, with insurance companies covering its use for many conditions, he says. Kennedy says the international medical marijuana industry is posed to become a $100 billion opportunity in a decade.
As for cultural trends to come in 2017, Cy Scott, the founder of marijuana dispensary and strain review site Leafly and cannabis retail data startup Headset, says this year will bring continued mainstream acceptance fueled by states like California, Massachusetts, and Nevada rolling out regulated adult-use markets. The emergence of national brands and new products like THC-infused sugar and savory foods that will appeal to a wider consumer market will also help fuel mainstream acceptance. Scott says 2017 will see a big jump in brand maturity and diversification of products that will help grow market share. He says more edibles manufacturers will focus on producing "micro dose" products with lower levels of THC.
"People have heard too many stories about consuming an edible that was too strong," says Scott. "To counter this, smaller servings will increase in popularity. Micro dosages will help those new consumers learn the effects and understand potency levels as they graduate to stronger infused products."
The uncertainty should thaw so long as Trump's first 100 days go by without a rise of enforcement. Once the industry regains confidence, DeAngelo says, 2017 could release the powerful market dynamics that have been generating under state-regulated markets since the first laws went into effect in 1996.
"Going into 2017, the ground work for the industry has been laid to rival Hollywood and Silicon Valley within the next decade," says DeAngelo.