The legalization and sale of cannabis is advancing rapidly not only in the U.S., but globally. Global cannabis sales are expected to increase from $13.4 billion in 2020 to $33.6 billion by 2025. That growth opportunity has spawned a long list of startups, IPOs and also a wave of cannabis-related mergers and acquisitions (M&A) involving companies in production, distribution, real estate, retailing and other areas.
Like any young industry, cannabis companies need to raise capital in order to finance future growth. Due to their precarious legal status, cannabis companies do not enjoy the access to banking services that many other companies enjoy. This makes raising capital harder and increases its cost. Low interest rates, however, have made those costs relatively cheaper in recent years. That's about to change. The industry may face increasing challenges in 2022 after the Federal Reserve signaled this month that it plans to raise interest rates three times by the end of next year.
Rising Interest Rates
As the industry grows, it has to adapt to a fast-changing, complex legal landscape. Cannabis companies' challenge is that different states within the U.S., and different countries, have varying laws on the legality, use, distribution, and growth of cannabis.
Jeremy: This is basically an effort to reduce, or at least understand, the flow of cannabis into the illicit market.
Jeremy: It can quickly slide from paying a fine to severe jail time under drug trafficking laws.
Adrian: One thing that I really wish would be allowed is inventory in our vehicle. Something like our hottest items in the trunk and the safe ready to go.
Adrian: Hey, hey. Thanks so much. You have a good one.