The Growing Cannabis Market and Industry

The two main businesses in the industry are the cultivators and the dispensaries, but there are other businesses in the cannabis industry. There are manufacturers who create edibles, oils, tinctures, and more; there are also laboratories that focus on product testing.

There are breeders who work to create high-quality seeds and experiment to create new strains. The breeders supply their seeds to the cultivators.

Another unseen player in the cannabis industry is extractors. They take the plants and turn them into concentrates, like oils or tinctures. The concentrates show up at the dispensaries in vaporizers, tinctures, and more. The extraction requires specific machinery and knowledge on the processes to extract cannabinoids from plants. The machinery can be expensive upfront.

The manufacturers use the concentrates from the extractors to create products like edibles.

In the states where licenses are limited, the cultivators have some control over their pricing, but Colorado and Oregon, where more licenses are available, indicate that this trend may not be completely sustainable. In Colorado, the average wholesale cost of cannabis was about $3,500 per pound in 2013, but it is now $1,535 per pound in 2022.

Currently, the cannabis market varies from state to state since the federal prohibition makes it impossible to sell cannabis across state lines. However, this could change when cannabis becomes legal federally. When that happens, the market might become overloaded, or it may balance out as it is distributed throughout the country.

Cultivating cannabis does not just offer the opportunity to sell the buds. The hemp can be turned into fabrics, cooking oils, plastics, and even sources of biofuel. Cannabidiol (CBD) can also be sold in oils, tinctures, and more to help manage chronic pain. CBD can be extracted from both cannabis and industrial hemp, and it does not have any psychoactive properties. In addition to chronic pain, it can treat inflammation, anxiety, rare forms of childhood epilepsy, and other neurological disorders. Growers can also provide cannabis to researchers who are looking into the other benefits that cannabis can provide.

Cannabis Industry Threats

Regulations and supply problems are the two major threats to the cannabis industry.

Since cannabis is only legal in some places, regulations are not completely defined and are subject to change. This is likely to continue until it is federally legal. There is no way to test a driver to see if they are under the influence of cannabis, though breathalyzers are in the works. Fear of people driving under the influence is a big piece of the threat and will likely continue to be until more information is produced about how it affects driving.

Supply is the other big issue. Too much supply can have consequences, as we have seen in Oregon, but too little supply can also hurt the industry. Growers may not want to enter the industry if they do not know if their products will sell, so they may choose to hang back until they see how the industry is doing. Supply shortage and low-quality supply can lead to people returning to purchase on the black market, hurting their local industry.