2020 could be a decisive year for the cannabis industry

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Cannabis: House of Representatives passed banking law 1:17

(CNN Business) - 2019 was a momentous year for the cannabis industry: hemp-derived CBD had a peak, Illinois made history, the market in California became complicated, vaping underwent changes and North American cannabis companies received some Hard attention calls.

2020 is preparing to be an even more critical year.

There is a saying widely used in the cannabis business that says that the emerging industry is so fast that it takes place in years of dogs. 2020 has just one week and cannabis is already in the headlines after Illinois started the new year with recreational sales.

Other states are getting closer and closer to legalization this year, and several are reflecting on the best way to guarantee social equity. Also in 2020, the FDA could cool the craziness of the CBD, and a congressional movement could change the game completely.

The tumultuous past months have established that 2020 is a decisive year for some of the biggest in the business, as well as the scores of lesser-known players preparing to make their moves.

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"There will be a lot of movement in 2020," said Chris Walsh, executive director of Marijuana Business Daily, a commercial publication for the cannabis industry. "It remains to be seen if it leads to real legalization in some states."

The next US states in legalizing cannabis

14 US states and territories they have legalized sales of recreational cannabis for adults (although regulations have not been fully implemented in places like the District of Columbia and Vermont). A total of 33 states have legalized cannabis for medical purposes.

Illinois will be the center of attention, after making history last year with the first legislatively enacted recreational cannabis program. Critical aspects of its program include social equity and social justice measures created to help the people and communities most affected by the War on Drugs.

"Unattended groups hold the industry accountable," said Gia Morón, executive vice president of Women Grow, a company founded to promote the presence of women in the cannabis industry. "And our legislators are recognizing that [social, gender and minority concerns] are part of this now."

New York and New Jersey have been flirting with legalization, but have been delayed to review logistics related to aspects that include social equity. The governors of New York, New Jersey, Connecticut and Pennsylvania met last fall to hold a summit on cannabis coordination and vaping policies. New Jersey is putting a recreational cannabis measure on voters in November, and Governor Andrew Cuomo promised Wednesday that New York would legalize cannabis this year.

Other possibilities for states that would legalize recreational cannabis could be Arizona, Delaware, Florida, Minnesota, Montana, New Mexico, North Dakota and South Dakota, Walsh said. Even Alabama, Mississippi and South Dakota could become new markets for medical cannabis and medical programs in other states could see expansions, he added.

"If you look at the map at this time in the US, we are reaching the point where there are not so many [states] that can legalize," he said. "You can see any of those and say there could be a possibility in the next year or two for them to be legalized."

Federal legalization

Now, it remains to be seen if national legalization is on the horizon, Walsh said.

How federal agencies regulate hemp, a cannabis plant with less than 0.3% tetrahydrocannabinol (THC), and derivatives such as cannabidiol (CBD) could be extremely revealing on how the U.S. government could address the regulation of others Cannabis forms in the future, he said.

CBD products have been in fashion, but they may be on unstable ground. CBD oils, creams, foods and beverages have seen an explosion in availability after the approval of the 2018 Agricultural Law, which legalized hemp but left the US Food and Drug Administration much discretion. (FDA), which regulates pharmaceutical drugs, most foods, additives and dietary supplements.

The FDA is reviewing the CBD and has not yet issued a formal guide, although the agency has issued warning letters to CBD manufacturers making unsubstantiated health statements. Collective lawsuits have been filed against several CBD companies, including two of the largest, Charlotte's Web and CV Sciences, claiming they participated in deceptive or false marketing practices, Stat News reported.

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Cannabis experts are waiting for the fate of industry-friendly bills, such as the STATES Act, which would recognize state-level cannabis programs, and the Safe Banking Law, which would allow banks to more easily serve companies of cannabis Those and other bills will probably not be fully approved, but some information may help to create more comprehensive legislation, Walsh said.

“It seems that [legalization] has to happen soon, but it might not happen as people think. A bill is passed to allow banks to clearly serve this industry without a lot of restrictions, and that could be a pseudo-legalization, ”said Walsh. “So, the real federal government movement to 'legalize' marijuana or let states decide may not come for years; but that reality could be developed anyway with some other type of legislation. ”

New regulation in older markets

In addition to the promise of new markets, the evolution of established cannabis programs could also play an important role in the cannabis business landscape.

In California, the world's largest cannabis industry has developed intermittently. Regulators point to an entrenched illicit market as companies report tax increases and local control measures that limit distribution.

"California is going to get worse before it gets better," Walsh said.

And in Colorado, where the country's first legal recreational cannabis sale was carried out, a list of new laws is prepared to change the cannabis landscape by allowing social consumption companies and the capacity of companies outside from the state and publicly traded, have licenses.

New products arrive in Canada

The launch of Canada's "Cannabis 2.0" of derivative products, such as foodstuffs, vapes and beverages, is in its initial stages. Canadian-listed licensed producers who have been harassed by the slow and lost development of the market have strongly opted for these new forms of products.

But it takes time for provincial and state cannabis programs to take off, for companies to go online and for production and supply to balance demand. Therefore, any major return will not occur immediately, said Morgan Paxhia, managing director and co-founder of the cannabis investment firm Poseidon Asset Management.

'Failures of great success'

Overall, 2020 should bring volatility to cannabis companies in Canada and the United States, he said, noting that the current economic cycle of the industry is reflecting that of the dotcom bubble and the subsequent outbreak.

"There were very good companies that emerged from that period, but most of the companies during that time ran out," he said.

Paxhia expects at least one, if not several, "failures of great success."

Capital restrictions are expected to continue in the first stage of 2020, as some initial bets do not work for some companies, said Andrew Freedman, former Colorado cannabis czar who now runs Freedman & Koski, a firm that consults with municipalities and states, inciting legalization.

The low points of some companies could create opportunities for other companies and investors who waited for the first cycle, Freedman said.

"In 2020, I see that everyone will understand the cannabis economy a little better," he said.

Cannabis