Predictions for Cannabis in the New Year

LOUISVILLE, Co. — Where is the cannabis industry heading in 2023? Cannabis data and analytics firm BDSA has some predictions.

From company consolidation and a focus on minor cannabinoids to a shift in retail shopping experiences, there’s a lot to keep an eye on, Rick Maturo, director of insights and analytics with the Louisville, Co.-based company told CSP Daily News.

While convenience-store retailers can’t sell marijuana, the 2018 Farm Bill opened the door for other cannabidiol (CBD) and hemp products. But that doesn’t mean c-stores aren’t getting involved with the category through other avenues such as leasing space adjacent to the store for a medical marijuana dispensary.

Meanwhile, the industry remains in constant evolution. The New York market, for example, will be the biggest single opportunity for growth in the U.S. cannabis industry in 2023, Maturo said, but the delay of adult-use sales, limited licensing and illicit competition will stunt growth in the market’s early stages.  

Click through to see highlights of BDSA’s predictions for 2023 …

Continued price compression and competition from the illicit market will drive brand share consolidation in mature markets, Maturo said. Merger and acquisition activity will increase as the largest multi-state operators (MSOs) absorb other MSOs and struggling independent brands.

“Just because they’re a little bit more vulnerable to some of the harder economic conditions that we’re going through,” he said.

In higher growth markets like Maryland, Missouri and Michigan, independent and homegrown brands are expected to remain strong.

Solventless products and minor cannabinoids also are trending, and could present opportunities for the c-store industry, Maturo said. Solventless products will represent a new wave of premiumization in the edibles and concentrates category, and this applies to CBD products as well, he said. Solventless describes cannabis extractions and concentrates that are made without the use of chemical solvents, or harsh chemicals.

“If you’re a c-store and you’re looking to court a different segment of the cannabis consuming population that’s looking for products outside of the dispensary landscape, solventless products are definitely a place to look,” Maturo said.

Targeting specific need-states through minor cannabinoids—such as cannabinol (CBN) and cannabigerol (CBG)—is another trend expected to continue.

The minor cannabinoids can help direct more knowledgeable consumers to what the end-result of using a product is going to be, he said. A CBN product with lavender, for example, could help consumers know to use the product to help them sleep.  

“Just as folks step into the c-store to get an energy drink or something to uplift their mood, these types of products are another way that c-store operators can look to reach a new segment of consumers and potentially even court new consumers into the store,” Maturo said.

New retail strategies will be needed to meet evolving consumer needs, Maturo said. Options such as curbside pickup, delivery and direct-to-consumer sales are here to stay. But store experience matters, too.

As consumer education improves, more open retail environments will thrive, moving away from traditional dispensary experiences and toward a premium CPG shopping experience, he said.

Maturo said the industry is likely to see more “store within a store ideas,” too, similar to what Laval, Quebec-based Alimentation Couche-Tard has done in Canada and a recent lease agreement with a medical marijauna dispensary adjacent to about 10 Circle K stores in Florida.

“If you think about the type of consumer that’s going to a c-store and the types of categories that really tend to be big movers at the c-store—things like tobacco, beverage alcohol, etc.—you really see a lot of overlap in the type of consumers. So for me, it’s really a no-brainer for some of these cannabis operators to want to partner with a c-store.”