With a tough year now behind us and the holiday festivities coming to a close, our team at Encore Labs wanted to share our predicted outlook for 2025. 2024 did have rough patches that aligned with some industry woes, but we ultimately saw a year of optimistic transition. Election results across the country promise to bring changes both good and bad, and the pending descheduling will hopefully help the industry breathe a sigh of relief. We believe the cannabis industry is poised for a groundbreaking year in 2025, one driven by regulatory changes at the federal and state levels, and a growing consumer base that continues to prove that the industry is here to stay.
Federal Changes
At the federal level, all eyes will be on the incoming president. With a Republican President, senate and house majority, the Republican party should be able to pass the legislatures that they want. However, when it comes to cannabis, what does that mean exactly? As usual, opinions appear to be divided.
While the optimistic opinion is that republican policy tends to favor state’s rights to set whatever laws they want, the pessimistic view is that republicans have historically authored some of the strictest anti-drug laws in existence and have been reluctant to change their views. It remains to be seen how republicans plan to tackle this issue as calls for federal legalization only grow.
Legalization may be some ways away, but descheduling is (hopefully) just over the horizon. We wrote about the implications of descheduling cannabis from its current state of Schedule I to Schedule III and the main pros were access to banking and different financing options. Additionally, with the continued push for the SAFE Banking Act, restrictions for cannabis businesses could ease and provide some much needed respite for struggling business owners. These steps may not be big enough, but they would be signs of progress that greater change is coming as long as we continue to push for it.
State Changes
Without federal legalization, each state is still in charge of how they want their cannabis industry to operate, and each state that Encore Labs operates in has some exciting and unique changes in store for 2025.
California
California’s cannabis industry remains one of the largest in the world, constantly setting trends and innovations for market development. We don’t expect that to change as in 2025 California is set to introduce Cannabis Cafes. Law AB 1775 allows for licensed cannabis retailers to prepare and sell food and beverages at these newly created cafes and/or lounges. While there is no telling how many of these cannabis cafes will open within the year, we can expect a large boom in cannatourism across the state.
Arizona
The state of Arizona has been a fast-growing hotbed for new cannabis businesses. With tons of new license holders and a flurry of investments from local and out of state operators, the landscape for Arizona looks promising. There are no new specific laws going into effect in 2025, but as recently as November 2024 the Arizona Health Services Department (AZDHS) did approve adult use recreational cannabis delivery. This recent change will surely help continue the upward trajectory of the state’s consumption and incentivize further investment into this flourishing market.
Testing Changes
The article that made waves throughout the country, especially the state of California, was a deep dive into the potential harms of untested chemicals, specifically certain pesticides, that are present within legal cannabis products. The article shared by the LA Times split opinion amongst many within the space, and we had our own thoughts you can read here, however it did put a spotlight on the importance of safety and testing. The conversation has seemed to focus on how many pesticides should be tested for, but the real talking point should be the standardization of testing so that everyone is on the same page regarding what can and can’t be allowed within your cannabis products.
We foresee a huge push for the implementation of uniform testing standards, starting with a broadening of the current pesticide panel in California, that may influence other states to do the same. We also believe that 2025 will be a huge year for testing as more and more new, innovative products are pushed to market to try and provide excitement and differentiation.
Conclusion
With 2025 just getting started there is so much potential for growth as we continue to all work together to make the cannabis industry a legitimate business landscape. Through the trials and tribulations we have faced, we are still here and still fighting the good fight. We are staying quietly optimistic for what this year holds and wish everyone the best of luck as they continue to push the boundaries of the cannabis market and take us one step close to legalization.