Chris Walsh has had a front-row seat to the evolution of the U.S. cannabis industry.

When he joined Marijuana Business Daily as founding editor in 2011, less than a dozen states had legalized medical cannabis. Facing an uncertain future, some states experienced crackdowns, and the publication’s founders considered leaving the business themselves.

However, the last decade brought on a major shift in cannabis acceptance, adoption — and above all — opportunity.

“We could not have envisioned this type of growth and that we’d be speaking to mainstream companies that are increasingly entering this industry,” Walsh said.

Walsh, now president and CEO of Marijuana Business Daily, discussed the transformation of the U.S. cannabis market during Cannabis Products Exchange, held virtually April 27-28. He also offered insight into how emerging companies and those approaching the industry from mainstream consumer packaged goods (CPG) backgrounds can make the most of it.

“This is a crazy, exciting, fun and challenging industry,” he said. “It can be maddening, but it can be potentially lucrative as well.”

Walsh said 38 states, including Washington D.C., have legalized medical cannabis, while 18 states, also including Washington D.C., have recreational programs. The 2020 election proved instrumental, with five states legalizing some form of cannabis. South Dakota was a unique case, Walsh noted, since it legalized medical and recreational cannabis at the same time — a first for the industry.

New York’s legalization of recreational cannabis could be beneficial in driving greater banking participation, since New York City is the financial capital of the world. Walsh added it could have a domino effect, potentially prompting legalization in Pennsylvania or Connecticut.

“As the financial institutions and the banks see what this industry can do and the benefits of it — they’re already on the edges looking at this, perhaps preparing plans to get in — this will further that movement,” he said. “As we all know, money moves politics. Getting them on board and putting pressure on federal and state legislators to change the laws will be a benefit to increasing the scope and reach of this industry.”

Eyes are also on Texas, which only allows hemp and CBD for medical use at this point.

“Texas is really the big prize remaining and Florida with recreational,” he said. “Even a full medical program in Texas would be fantastic and would open up the door for tremendous opportunities.”

Citing data from Marijuana Business Daily’s Factbook, Walsh said cannabis retail sales have steadily grown since Colorado and Washington introduced recreational cannabis in 2014. In 2018, U.S. adult-use sales surpassed medical cannabis for the first time, generating roughly $5 billion.

Walsh described 2019 as a “watershed year,” with the launch of California’s recreational market, among others. Adult-use sales generated between $6.6 billion and $8.1 billion, with total cannabis sales reaching between $10.6 billion and $13 billion. Last year brought in between $18 billion and $21.6 billion, driven by demand during the pandemic.

This year, total cannabis sales are expected to fall between $23.1 billion and $27.6 billion. Sales are projected to surpass $40 billion by 2024.

For perspective, legal cannabis sales in 2020 eclipsed the revenue generated by the National Football League, which comes in at $12 billion. Legal cannabis sales in 2025, projected to climb to at least $38 billion, would outpace both the current U.S. craft beer market ($27.2 billion) and the global opioids market ($26 billion).

“Cannabis in general has a bright future,” Walsh said. “It’s not one of the top 10 industries in this country, but as you can see, it’s becoming significant, it’s becoming mainstream, it’s becoming accepted.”

Walsh noted edibles continue to grow year-over-year, thanks to new product development and consumer demand. He pointed to sweet applications — gummies, chews, taffy and caramels — as some of the most popular forms.

Savory applications haven’t resonated as deeply with consumers, Walsh said. He pointed to the possibility of super-microdosing to balance the dose and the serving size.

“One of the reasons might be when you eat something like that, you want quantity,” he said. “You don’t want to have one chip and get high...We know people love savory foods and snacks. I don’t see why cannabis would be different if we can figure out how to incorporate it effectively into products.”

Beverages, meanwhile, are experiencing “good growth” off of a small base.

“This is still a largely untapped area — not to say that companies aren’t focusing on it, but there’s a lot of potential here,” Walsh said. “It’s still new to most consumers. Some markets haven’t had beverages until recently, and some still don’t.”

Walsh pointed to competition, fragmented regulation, and developing strong retailer relationships as challenges for cannabis businesses. He suggested learning and embracing the industry, tailoring products to specific customers and need states, and taking a nimble and flexible approach to being successful in an unpredictable industry.

Sharing knowledge and experience across the boundaries between the cannabis and CPG industries is also critical. Walsh said the cannabis industry can adopt processes, equipment, scalability and consistency from the CPG world, while those coming from mainstream backgrounds can learn the culture, regulations, and how to build relationships from cannabis industry professionals.

“There’s a lot of crossover there,” he said. “It shouldn’t only be the cannabis people and only the mainstream people. You’ve got to have a blend of both to really be successful.”

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