February 12, 2021 5 min read
The opinions expressed by the entrepreneur’s contributors are their own.
From a global pandemic that disrupted almost every market to a historic presidential election year, 2020 was unprecedented for the cannabis industry in almost every way. The year brought new and market changing challenges when it came to supply chain and nationwide lockdowns. It also opened up multiple opportunities for the industry after state governments viewed cannabis as an essential business.
With cannabis demand at an all-time high (and millennials preferring alcohol as their substance of choice), a new government in the White House, and an ongoing global pandemic in the cannabis sector – from breeders and processors to dealers and retailers are looking back to Looking ahead and bringing a new mindset into 2021 that is geared towards improving predictability and reliability across the board.
For success in the cannabis sector in 2021, there are four main areas that operators should focus on.
Related: 3 Best Practices for Cannabis Retail Businesses During a Crisis
1. Changes in buyer behavior
The transition from retail stores to online ordering, home delivery, and roadside collection was quick to meet the demands of statewide lockdowns and home orders across the country. While consumers welcomed a rapid shift, the bar for customization of purchase options was low, and operators were eager to immerse themselves in any solution that worked. In 2021, operators will have the opportunity to perfect home delivery and roadside collection over the next few months in order to continue these options long after the pandemic ends.
Aside from how consumers shopped, the products they shopped for have also changed significantly. Food sales and consumption skyrocketed as inhalable forms of cannabis became less attractive compared to options that would have less respiratory impact. Hemp CBD sales fell sharply in the wake of the COVID-19 immune supplement boom. New types of consumers turned for reasons beyond recreation such as: B. Mental health management and sleeping pills, cannabis too.
Consumer preference can change rapidly, so staying relevant in the industry will continue to be a challenge in 2021. Continuous innovation of new products will be critical this year. The industry should expect a boom in product innovation related to the expansion of cannabis flower varieties, beverages and foods, as well as the influx of exciting marketing campaigns and partnerships.
2. Setbacks in enforcing compliance
The industry has hardly seen any major political setbacks in recent years. While there have been some delays here and there, the alignment of the legislation has been mostly in favor of the industry. It will likely continue into the next four years of a Biden presidency. However, as legalization increases across the country, compliance and enforcement of cannabis is also expected to increase. In 2020, key to cannabis survival was resilience and the ability to spin quickly as operators saw announcements and compliance changes by the state and local governments almost daily, many of them specific to the COVID-19 Pandemic.
The faster a company can adapt to these changes, the better the company will perform in the long term. For this reason, cannabis operators should handle their compliance activities with the utmost care and spend more budget and more attention on them than in previous years. Compliance with new and rapidly changing COVID guidelines as well as cleanliness and safety standards will continue to be a major burden for operators.
3. Need for banking
It cannot be denied that there has been great strides in the legalization of cannabis and the growth of a new industry in recent years. Banking and payments, however, remain an important issue for cannabis operators. Unlike other legal, regulated industries in the U.S., banks prohibit cannabis from operating on credit cards, debit cards, and many other types of banking services, even though they collectively generate a total of $ 6.59 billion in tax revenues from legal adult marijuana sales nationwide last year.
In 2021, cannabis banking reform will be more robust and advanced, especially with the current democratically run House and Senate. The House of Representatives introduced the Secure and Fair Enforcement (SAFE) Banking Act in 2019 to permanently protect financial institutions in legalized states that want to offer marijuana companies essential banking services. Passage could be a seismic shift for the industry as so many companies are still cash only because they cannot obtain or maintain a bank account.
Given the ongoing momentum for state and state legalization and the severe economic impact of the coronavirus pandemic, credit unions will be forced to rethink the cannabis industry this year.
Related: Your cannabis company can get a bank account, but not easily
4. Disruptions in the supply chain
A survey conducted by the Institute for Supply Management between February 22, 2020 and March 5, 2020 found that almost 75 percent of companies report some form of supply chain disruption due to coronavirus-related transport restrictions. While the cannabis industry was no exception, equipment and supply shortages weren’t the only factors disrupting the cannabis business in 2020. The lack of personal protective equipment posed particular challenges for those who did not stop business operations.
Looking ahead, operators need to build a resilient supply chain that doesn’t rely on options in a single region and takes into account potential future disruptions. When reviewing potential vendors this year, operators will need to ask detailed questions about the location where vendors source materials, the setbacks they have seen as a result of the COVID-19 pandemic, and the other supply chain disruptions that they faced were past.
2020 changed the cannabis industry forever, but pushed it forwards in many ways and opened up endless possibilities for operators through new target groups and customers, optimized systemic processes and more innovation. We’ll likely watch these trends year-round and areas cannabis operators need to stay sharp in to stay successful in 2021.