Written by Johnathan McFarlane, Director of Strategy at Hybrid Marketing Co.
This is said every year, and 2019 was no exception: it was the most pivotal year to date in the cannabis industry. There was scandals, hype, and crisis. The inevitable march of legalization continued. CBD became a craze. The industry matured and developed, but not without some bumps in the road. In the following post, we take a look back at some of the most important stories that shaped the North American cannabis industry throughout 2019.
The Vape Crisis
Promoted as a healthier way to ingest nicotine or cannabis, vaping was rapidly taking market share away from smoking dried flower as a consumption method. At least, that was the case until earlier this year when a mysterious lung sickness began afflicting hundreds of people and ultimately taking the lives of more than 50. The link to vaping was made quickly but finding a more specific cause had scientists stumped. After months of research and testing, it was determined that vitamin E acetate was to blame. Vitamin E acetate wasn’t often used in legal products but was rampant in fruity-flavored cannabis vape oil common on the black market.[Further reading]
The CBD Craze
CBD became a household term in 2019. Because it is sourced from the cannabis plant, research behind CBD’s usefulness in medicine has been restricted until recently. That hasn’t stopped it being touted as everything from a complexion-enhancing beauty product to a cure for cancer. From CBD massages to infused foods, beverages and pet treats, 2019 was the year that it truly invaded our culture. Google search trends indicate that it hit a peak in May of 2019, which saw more than a 100% increase over the previous year’s searches for "CBD."[Further reading]
Canada Legalizes Extracts, Edibles, Topicals
On October 17 the Canadian government stayed true to its commitment to open up their market to another tranche of product categories a year after dried flower was legalized for adult-use nationwide. The range of extracts (including CO2 oil used in vaporizers), beverages, edibles, topicals and tinctures were all included in this second round of legislation. This move greatly expanded accessibility to consumers and helps to de-stigmatize the cannabis plant which is often incorrectly only associated with smoking. It’ll also be a great new revenue source for Canadian cultivators who’ve had many, many challenges throughout 2019.
The First Cannabis Consumption Lounges Open in LA, Vegas
Often talked about since legalization was just a dream, public places where open cannabis consumption was allowed have always been on the long-term plan for activists. While a variety of laws and regulations technically made these establishments legal several years ago in some places, they didn’t become a reality until this year. The barrier was finally broken in October by an establishment called Lowell Farms Café in West Hollywood. Just two weeks later Nevada got in on the action with a 16,000 sq/ft venue on tribal land. Now that the floodgates have been opened, we predict dozens more cannabis consumption lounges will pop up in 2020.
[Further reading 1, 2]
Hemp Farmers Complete First Nation-Wide Legal Harvest
The first nation-wide hemp harvest since the passage of the Farm Bill in 2018 took place this fall. To say it was a disappointment would be an understatement. The harvest was met with a perfect storm of problems including terrible weather, a glut in supply, and speculative growing. When you consider that hemp hasn’t been farmed on such a large scale in nearly 80 years, it’s easy to understand why there would be problems. We expect that next year will bring better results, with improvements each year after as hemp develops into an established commodity crop.
Michigan, Illinois and Maine Legalize Adult-Use
The rollback of prohibition continued in a big way in 2019. Michigan, Maine, and Illinois all made the move to join the states that have legalized adult-use of cannabis. Sales kicked off December 1 in Michigan, and the tax revenue is expected to be a big boost for the struggling Detroit metropolitan area. Technically missing 2019 by a day, Illinois kicked off recreational sales off on January 1, 2020, with their Lieutenant Governor being one of the first purchasers. Despite passing their adult-use legalization bill in 2016, the license application process in Maine was finally opened up at the end of 2019, with sales expected to start this summer. LA is legal, Chicago is now legal, when New York goes rec legal within the next year or two, the wave will truly be unstoppable.
[Further reading 1, 2, 3]
The legal cannabis market is built on consumer’s trust that the businesses act in good faith. If consumers don’t trust the legal cultivators, they’ll simply go back to the illicit market. In 2019 there were a number of Canadian cultivators that were penalized by regulators, including Bonify and Agrima, which both had their licenses revoked. But none was as shocking as the CannTrust scandal. For the past several years they had the reputation of a stable, growing company who focused on quality product and efficient operations rather than press releases and hype to bump stock valuations. Then it was revealed in June that CannTrust had been illegally growing in unlicensed grow rooms since as early as 2018. What’s worse is the direction seemingly came from the top. The implosion that followed was shocking. With both sales and cultivation being halted, the executive team being fired, over $70 million in product destroyed and their stock valuation dropping to a fraction of what it once was, it remains to be determined whether CannTrust will have their license revoked entirely. Either way, the damage was significant to those investing in the publicly traded Canadian cannabis businesses.
2019 was another massive year for cannabis, and it’s a certainty that 2020 will be even bigger, with adult-use in sight for six more states. We’re excited to be a part of this industry, and to continue to expand our contribution as we move into the next decade. Happy new year!
About the author: Johnathan cut his teeth working with the world’s largest cannabis companies in the Canadian industry before recently bringing his marketing chops back to the US. He’s now the Director of Strategy at Hybrid Marketing Co, a cannabis-focused agency based in Denver. He’s made lots of mistakes and loves helping others avoid making the same ones!