During the last two years, several states in the Northeast region of the United States (US) have passed legislation to legalize recreational cannabis. We are bullish on this trend and believe the opening of additional recreational markets will prove to be a significant catalyst for the US cannabis industry.

Last week, Rhode Island jumped on the recreational cannabis bandwagon and submitted two pieces of legislation which are expected to be reviewed next week by state committees. The unveiling of revised cannabis legislation comes after months of negotiations and we will monitor how the bills are received by the committees.

Although Rhode Island is a small market, we believe the development is significant for the cannabis legalization trend in the US. Since 2020, several new recreational cannabis markets have opened in the US and we have been impressed by how the industry has grown in such a short period of time.

When comparing the growth of the recreational cannabis market between 2014 to 2016 and 2020 to 2022, we have noticed that states are reaching $1 billion of annual cannabis sales in a much faster pace. We consider this to be a bullish indicator for the US cannabis market and will monitor how new markets including New Jersey and New Mexico perform.

Over the next decade, we expect the US cannabis industry to record exponential growth and believe the industry will benefit from a more suitable regulatory environment and from advancements in technology. While we consider legislation to be the most important potential catalyst for the US market, we believe advancements in technology will play an important role in the launching of new cannabis products and in lowering operating costs.

So far, 2022 has proven to be a challenging period for the cannabis industry and the vast majority of public cannabis companies have lost more than half of their value since 2021. During this time, we have seen a shift in the performance of leading US multi-state operators (MSOs) and Canadian Licensed Producers (LPs).

When comparing MSOs to LPs, we noticed MSOs are generating much more revenue than LPs. From a profitability standpoint, MSOs are outperforming LPs and we are not surprised by the evolution of the industry. Going forward, we expect US operators to continue to outperform Canadian operators and believe our readers should be aware of this.

If you are interested in learning more about the advancement of the US cannabis market, please send an email to support@technical420.com with the subject “US Cannabis Industry” to be added to our distribution list.

Authored By

Michael Berger

Michael Berger is Managing Partner of StoneBridge Partners LLC. SBP continues to drive market awareness for leading firms in the cannabis industry throughout the U.S. and abroad.