After the progress the cannabis industry made in 2021, the new year has big shoes to fill. But with the midterm elections right around the corner, experts say 2022 just might deliver.
From possible federal reform and expanding international opportunities to increasing brand awareness and ongoing M&A, 2022 could be a big year for cannabis.


The consensus among lawmakers, advocates, and industry insiders is that federal policy reform is coming, it's just a question of when. Many had hoped 2021 would be the year, and major executives like Canopy Growth CEO David Klein even bet on it — but he was wrong.
And the cannabis legalization bill released by Sen. Chuck Schumer (D-N.Y.), Sen. Cory Booker (D-N.J.), and Sen. Ron Wyden (D-Ore.) didn't provide the motivation many were expecting. A proposed 25 percent tax rate and broad regulatory powers for the Food and Drug Administration have made the Cannabis Administration & Opportunity (CAO) Act a tough sell among major cannabis operators, plus it lacks the support it needs to pull 60 votes in the Senate. 
Schumer and Booker have made it clear that they will only consider pushing for cannabis legislation that contains equity provisions, like those in the CAO Act or the Marijuana Opportunity Reinvestment and Expungement (MORE) Act. In an interview with Cheddar News, Rep. Earl Blumenauer (D-Ore.) empathized with the senators' take on equity but urged them to consider more incremental progress.
"I completely agree with their notion on racial equity and justice, but I think we're going to get there faster if we start with the SAFE Banking Act, demonstrate the base of support, move us a little forward, and then work together on comprehensive legislation that you can later fold the SAFE Banking Act into after it's enacted," he said.
Rep. Dave Joyce (R-Ohio 14th District), who recently partnered with progressive Rep. Alexandria Ocasio-Cortez (D-N.Y. 14th District) on cannabis expungement bill the HOPE Act, made it clear he also supports step-by-step progress.
"The MORE Act … it's just too big, and we don't do big well here. So, we need to break it down into incremental, bite sized pieces of which the American people understand," Joyce said during an interview with Cheddar News.
Infighting among cannabis advocates in Congress has led many to believe the U.S. might not see major federal reform for years. But investment bank Cowen is still bullish on 2022. 
Analyst Vivien Azer told Cheddar News she expects to see something pass in the period leading up to the midterm election or during the lame duck period after. What that legislation might look like is a mystery, but Azer expects it could resemble an enhanced SAFE Banking bill that eases tax requirements on cannabis companies, enables capital markets access, and adds equity provisions and an excise tax.
"The amended version of SAFE banking is much more likely than the Booker, Schumer, Wyden bill," she said. 
Beacon Securities analyst Russell Stanley added during the same interview that a bill that reduces the tax burden on cannabis companies and opens market access could eliminate the need for broader federal legalization, at least for the time being.
"Do they need to see a full legalization to advance things? No. I think many of these companies are preparing for a relatively static environment on that front but would love to see their cost of capital come down and their tax burden come down," he said.
Regardless, the clock is ticking on reform. Rep. Nancy Mace (R-S.C. 1st District) introduced the first Republican-authored cannabis decriminalization bill in 2021, but experts still aren't confident Republicans will prioritize cannabis reform if they take control over Congress in 2022. 
But Rep. Blumenauer, who has been working on cannabis issues for close to 50 years, said he'd still be optimistic on cannabis even if Congress drops the ball next year.
"It's not going to be derailed if for some reason there's a change in the leadership in the House of the Senate. This is a movement whose time has not only come but it's passed," he said.


The U.S. typically commands the lion's share of attention in cannabis, but opportunities abroad are quickly unfolding — and cannabis companies are watching. 
In December, Malta became the first European country to legalize personal cultivation and use of cannabis, and other member nations like Germany, Switzerland, and Luxembourg could follow soon after, according to The Guardian. A nationwide referendum is planned in Italy for early 2022, according to Reuters. And Marijuana Moment reported that draft legislation for legalizing and regulating adult-use sales was circulating the Mexican Senate in late 2021.
International markets have more modest potential than the U.S. market, according to Viridian Capital Advisors but offer some benefits that the U.S. may not, like expansion opportunities and first-mover advantages.
"We expect international exposure to increasingly become a focus for many U.S. operators in 2022 with leading MSOs making significant investment (or at least announcing plans to do so)," Viridian wrote in a note.
In addition to U.S.-based companies entering international markets, Canadian cannabis companies like Canopy Growth, Tilray and Aurora Cannabis will continue their expansion abroad, according to market research firm BDSA. 
"As we look at global dominance, you look to the [multistate operators] and you look to the Canadian [companies], and the bigs just keep getting bigger. And they're acquiring other companies … they're raising more money, and they're just continuing to get bigger and more powerful," BDSA SVP of Commercial Development Jessica Lukas said.
But Lukas said these companies can rest easy that international competition won't likely come from major consumer packaged goods companies — at least for now. According to BDSA, most are still taking a "wait and see" approach. 
For investors looking to capitalize on international policy changes, Viridian recommended investing in pure play international companies. The firm cautioned against betting on U.S.-based cannabis companies, anticipating international operations will be an "unnecessary distraction" from operations in the U.S. and that "international exposure will always be an afterthought."


Cannabis industry experts have long awaited the moment when national brands emerge to motivate buying in cannabis, as they do in other industries. BDSA's Lukas said that 2022 could be the year of the brand.
"With better innovation, better technology, better messaging, branding, and education. And now … cross border movement, one thing we are predicting in 2022 is brand dominance and national brand awareness to actually start emerging," she said. 
Brand building has been uniquely difficult for cannabis companies due to the complex web of regulations in the U.S. that make it expensive and complicated to enter a new market. As a result, brand loyalty isn't as much of a driver of buying in cannabis as it is in other CPG industries. According to BDSA, only about 20 percent of cannabis consumers say brand reputation influences their product choices. Consumers are equally as likely to buy a product based on referrals from family or friends and more likely to buy a product they have used before.
But that could change in 2022 as brands continue to expand, delivering consistent experiences across state lines and international borders. Some of the brands Lukas identified as having national potential are Cookies, Wana Brands, Kiva Confections, Wyld, and Stiiizy, as well as brands from multistate operators like Cresco Labs and Ascend Wellness Holdings' Ozone.
"There is a difference between branding in this industry right now and what people are used to in beverage alcohol. And a big part of that is because there are regulations restricting what they can and can't do publicly and marketing," she said. 
Speaking of sales, industry analytics firm Headset anticipates the U.S. cannabis industry will top $30.5 billion in sales in 2022, up from $23.6 billion in 2021. Canadian sales are projected to hit about $5.6 billion, up from $4 billion in 2021.


On the back of a record 2021 for U.S. cannabis transactions, experts anticipate consolidation will continue into the New Year, driven by ongoing valuation compression into the third quarter and easier access to capital, according to Viridian Capital Advisors.
During his annual address in Las Vegas at cannabis convention MJBizCon, Marijuana Business Daily CEO Chris Walsh anticipated M&A accelerating into 2022 with "three or four mega-mergers in the U.S. and Canada."
"I think that's going to accelerate you're going to see some of the biggest companies start to team together," he said.
In a report on 2022 trends, Viridian Capital Advisors agreed the scale of transactions in 2021 portends large transactions in the year ahead. The firm anticipates transactions of equal size in addition to more traditional M&A, wherein a larger company acquires a smaller one.
"We are confident that now all but the largest MSOs are in play to be acquired," the firm wrote.
Some of the targets within Viridian's coverage that the firm identified as potential acquisition targets include 4Front Ventures, Cansortium, Goodness Growth Holdings, Harborside, and Planet 13, among others.