M&A, interstate expansion areas for cannabis opportunities in 2025

LAS VEGAS – As 2024 draws to a close, cannabis executives are looking ahead to what opportunities 2025 could bring for the burgeoning market.

Fueled by changing consumer preferences, shifting regulations and a difficult business climate, the cannabis sector is poised for significant transformation.

With sales in state-regulated U.S. marijuana markets projected to reach $58 billion by 2030, according to the MJBiz Factbook, the opportunities – and challenges – facing cannabis businesses and consumers are immense.

MJBizDaily asked industry stakeholders who attended MJBizCon 2024 last week where they see the biggest opportunities for marijuana and hemp businesses in 2025.

Marijuana mergers and acquisitions

MJBizCon speaker Steven Ernest, vice president of originations for Illinois-based private-market investment firm Chicago Atlantic, said overleveraged companies will shed assets in 2025 and be acquired by companies with strong balance sheets.

“Those who have the cash and ability to expand can find great deals from those who are out of time,” Ernest said.

“It is always darkest before the dawn, and now is the time to be aggressive and acquire cash flow-generating assets.”

Ben Gelt, an adviser with Fort Lauderdale, Florida-headquartered law firm Greenspoon Marder, agreed, adding that thriving companies will be able to acquire struggling businesses “on the cheap.”

“You’re going to have companies that are hanging on but don’t have robust management or don’t have what they might need in the back of the house to go beyond just hanging on,” Gelt said.

“The companies that are stronger will start to go a little harder at buying up some of the smaller guys and push for more consolidation.”

Interstate expansion

As mergers and acquisitions ramp up, established operators will capitalize on the opportunity to enter new states, according to Michael Teller, chief operating officer of The Panther Group in Atlanta.

Experienced operators’ ability to obtain debt and equity helps them get deals done, he added.

“Today, lenders and investors prioritize operators with a track record of success,” Teller said.

“These seasoned operators bring the expertise and operational strength necessary to succeed and scale.”

Cannabis consumer trends

As marijuana gains acceptance among demographics who prefer alternatives to smoking, companies that make edibles and infused beverages are poised to thrive in 2025, according to industry insiders.

Ricardo Baca, founder and CEO of Denver-headquartered cannabis marketing and public relations agency Grasslands, said that women specifically are a market that marijuana companies should be catering to.

“Women already make most purchasing decisions in most other retail segments,” said Baca, who led multiple conference panels during MJBizCon Week.

“With more women turning to cannabis for wellness-oriented solutions, brands from California to New York are already rethinking their marketing and sales strategies, product development priorities and core messaging to connect meaningfully with this demographic.”

Harrison Bard, co-founder and CEO of Renton, Washington-based Custom Cones USA and Massachusetts-headquartered pre-rolls brand DaySavers, said consumers are looking for high-potency products but their preferences are shifting from quantity to quality, creating opportunities for cannabis businesses that can deliver better products.

“The biggest trend we are seeing across all product categories is higher-quality inputs, and solventless hash rosin is growing in every category from concentrates to vape pens and pre-rolls to edibles,” Bard said.

Christine Apple, CEO of Oregon-based edibles maker Grön and an MJBizCon speaker, said working in regulated marijuana markets for a decade has given cannabis companies the knowledge they need about consumer preferences for product innovation as they enter new markets.

“As more states – and maybe even the (federal government) – get on board, the chance to bring incredible products to a growing audience is massive,” Apple said.

“The toolbox keeps getting better: new flavors, cutting-edge cannabinoid ingredients and smarter feedback loops to dial in the product.

“Honestly, the possibilities for 2025 and beyond are limitless – you just need to stay focused and put in the work.”

Marijuana rescheduling and research

Aaron Bloom, CEO of Clearwater, Florida-headquartered medical marijuana card provider DocMJ, said marijuana rescheduling could create opportunities for pharmaceutical research in the years to come.

Bloom noted that the federal government has acknowledged the medicinal benefits of cannabis, signaling a significant shift in public perception that opens the door for additional research.

“This milestone underscores the growing acceptance and legitimacy of cannabis, paving the way for government-funded research and high-quality medical studies in 2025,” Bloom said, adding that such research “could unlock transformative opportunities for medical cannabis advancements.”

Cannabis technology developments

Artificial intelligence has been a hot topic in every industry over the past two years, and cannabis businesses that embrace AI might be able to improve supply-chain transparency.

“From streamlining logistics to optimizing distribution, personalizing consumer experiences and predicting market trends, AI has the potential to elevate industry standards,” said Vince Ning, CEO of San Francisco-based cannabis distribution company Nabis.

Ning, also an MJBizCon speaker, added that AI can allow companies to “enhance their competitive edge.”

Ancillary businesses also have an opportunity to develop software and other services, such as point-of-sale and enterprise resource planning systems that are scalable and not subject to taxes under Section 280E of the Internal Revenue Code, said Scott Jordan, founder of the Colorado-headquartered Alternative Finance Network, which provides cannabis companies access to private lenders, banks and credit unions.

“I think there’s a wide variety of opportunities in the software space for entrepreneurs to come up with innovative products and services that the cannabis industry needs desperately,” Jordan said.

Margaret Jackson can be reached at margaret.jackson@mjbizdaily.com.