High on cannabis: The prospects for the industry continue to shine after the 2020 record | Burns & Levinson LLP


Despite the ongoing COVID-19 pandemic, 2020 was a record year for the cannabis industry and signs suggest that the trend will continue in 2021. Years of steady growth in the cannabis industry shone in 2020 with record sales growth, major legalization reforms, and resurgent optimism in the cannabis capital markets.

Sales growth:

Medicinal cannabis and recreational cannabis sales were in both mature cannabis markets such as Colorado (medicinal and recreational cannabis sales were over $ 2 billion, down from $ 1.7 billion in 2019 and $ 1.5 billion in 2018) as well as Oregon (annual sales surpassed) records for the first time in 2020, and emerging markets like Illinois (sales surpassed US $ 1 billion for the first time). One factor that contributed to these all-time highs resulted from dozens of states – and the District of Columbia and Puerto Rico – declaring their cannabis industries “essential” and allowing cannabis operators to stay open and operational throughout the pandemic . The exception was the Commonwealth of Massachusetts, where the governor closed adult cannabis deals for two months but declared medical cannabis companies “essential”. Despite the governor’s actions, Massachusetts sales still hit records: $ 700 million, up roughly 56% from 2019. This “essential” status of the cannabis industry fueled the industry’s optimism that some claim it has contributed to the record year. That optimism, along with continued industry growth, will only add further to continued sales growth in 2021.


At the start of the pandemic, states and grassroots groups ceased efforts to legalize cannabis and program launches as the focus shifted to addressing the spreading crisis. Despite the delays, legalization reforms accelerated in late 2020, with six states having passed significant legalization reforms in the November 2020 election cycle. Arizona, New Jersey, Mississippi, Montana, South Dakota, and Vermont all approved some form of medical and / or recreational reforms for cannabis. Notably, South Dakota was the first state to legalize both medical and recreational cannabis reforms at the same time. Now, 15 states have legalized cannabis for recreational use by adults, and 36 states have legalized cannabis for medicinal use. These trends are expected to follow in the coming year, as many other states – Florida, Hawaii, New York, and Virginia – have expressed a desire to approve their own medical and / or recreational cannabis reforms in 2021 (alongside the widespread Speculation) of federal legalization with a democratically controlled legislature and the Biden government).

Capital markets:

After years of rapid and significant growth in recent years, cannabis capital markets saw their first major correction in the second quarter of 2019 and carried over into the capital markets into the first half of 2020 – share prices, capital increases and M&A deals all fell significantly. According to Viridian Capital Advisors, cannabis companies raised around $ 2.6 billion in the first half of 2020, down 66 percent year over year.

However, the “essential” designation of the cannabis industry has resulted in record consumption and improved financial performance by both public and private cannabis operators. This, along with the November 2020 legalization reforms and newly democratically controlled legislation and administration, has pushed stock prices soaring (public cannabis stocks have soared + 60% so far in January 2021) and increased investment and mergers and acquisitions led activity (Viridian has forecast deal acceleration and estimated the industry had an order book of approximately $ 2 billion for undisclosed deals by 2021).