Reading the Leaves: What's in Store for Cannabis in 2021

On the heels of a year beset by turmoil and the myriad challenges caused by the global pandemic, the cannabis industry nevertheless entered 2021 poised for significant growth amid a landscape teeming with opportunity. Public acceptance of both medical and recreational adult-use marijuana has continued to grow, with public polls showing that the overwhelming majority of U.S. adults support its legalization. This support has translated into action, as voters in several states passed ballot measures in November. Despite the economic disruptions of the pandemic, the cannabis industry persevered; deemed “essential” in many states where it is legal, cannabis businesses continued to operate and saw remarkable growth, with overall U.S. cannabis sales increasing by more than 40% from 2019. This has translated into increased access to equity and debt capital for parts of the industry, pointing to a more robust M&A market for 2021.

Although cannabis remains illegal at the federal level, political and regulatory developments over the past year offer a basis for cautious optimism. On the political side, for the first time in years there appears to be a path forward for Congress to de-schedule marijuana as a controlled substance and potentially loosen the laws and regulations that have made it nearly impossible for the industry to access the banking and financial services sectors. Federal agencies and regulators also appear to be taking steps to address unique health, safety, environmental, and even intellectual property issues faced by the industry.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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