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$9 Billion in Revenue and $2 Billion in Losses



cannabis industry not profitable

The “marijuana mullet” is back with avengence in the cannabis industry as great top-line, headline-shocking, numbers for revenue got released with the usual massive losses on the bottom line, as usual.

Last year, an analysis of public filings by Green Market Report revealed that among the twenty largest publicly traded marijuana companies in the U.S., only one managed to turn a profit, while the rest collectively incurred a hefty $2.3 billion in losses. Despite generating over $8.7 billion in revenues altogether, these vertically integrated operators, with retail outlets, cultivation facilities, and manufacturing plants across various states, struggled to remain profitable.


These financial figures offer a glimpse into the overall performance of the cannabis sector. In 2022, a similar examination of financial filings indicated that merely two out of twenty-four public cannabis companies were profitable, with the sector as a whole facing losses exceeding $4 billion. However, it appears that losses have notably decreased year-over-year, signaling potential improvements in the industry’s financial landscape.


Top Performers and Underperformers


Green Thumb Industries (CSE: GTII) (OTCQX: GTBIF), based in Chicago, became the only cannabis firm to record net profits in 2023, with a $36.3 million profit on top of an amazing $1.1 billion in sales. This was a huge increase above its $12 million profit in 2022, demonstrating a stunning triple of yearly earnings.


In contrast, Florida’s Trulieve Cannabis Corp. (CSE: TRUL) (OTCQX: TCNNF) experienced the most significant setback of the year, with a whopping $527 million loss compared to $1.13 billion in sales.


However, Trulieve was not alone in its financial struggles. Curaleaf Holdings (TSX: CURA) (OTCQX: CURLF) of New York incurred losses of $281.2 million, despite leading in revenue among the twenty companies with an impressive $1.35 billion.


GTI, Trulieve, and Curaleaf were the exclusive trio to surpass the $1 billion revenue mark last year.


Other notable underperformers include:


– Ayr Wellness (CSE: AYR.A) (OTCQX: AYRWF), a Florida-based multistate operator, recorded a loss of $272 million.

– Cresco Labs (CSE: CL) (OTCQX: CRLBF) (FSE: 6CQ), headquartered in Chicago, faced losses amounting to $180 million.

– The Cannabist Co. Holdings Inc. (NEO: CBST) (OTCQX: CBSTF) (FSE: 3LP) from New York, reported losses of $174 million.

– Verano Holdings Corp. (Cboe CA: VRNO) (OTCQX: VRNOF), based in Chicago, incurred losses totaling $113 million.


The widespread financial struggles within the industry underscore the urgency behind potential regulatory changes, such as the Biden administration’s proposed shift of marijuana from Schedule I to Schedule III. Such a move could alleviate the industry’s tax burdens, potentially saving hundreds of millions annually, as estimated by various sources. However, the timeline for realizing these savings remains uncertain.


Market Upheaval


The dissimilarity between the evaluations from this year and the previous year emphasizes the volatility of the market, which is further emphasized by the removal of four firms from this year’s list.


MedMen Enterprises (CSE: MMEN) (OTCQX: MMNFF), one of the absentees, has essentially filed for bankruptcy. Due to a change of auditors, StateHouse Holdings (CSE: STHZ) (OTCQB: STHZF) and Vext Science (VEXTF) have not yet submitted their full-year financial reports to securities regulators.


The fourth omission, secondary multistate operator Red White & Bloom Brands (CSE: RWB), reported losses of $104.9 million and carried a debt of $240 million in the previous year, against revenues of $88.3 million disclosed in April.


According to Matt Karnes, Founder of GreenWave Advisors, the persistent losses stem from the exorbitant costs of operating within the federally illegal U.S. marijuana industry.


“Profitability and cash generation are formidable challenges,” Karnes remarked. “This underscores the urgency for government intervention… because financial resources are depleting rapidly. Section 280E is proving to be detrimental to all.”


Karnes acknowledged additional factors contributing to the sector’s financial downturn, including misplaced optimism surrounding the initial public offerings of many fledgling companies in recent years, and an underestimation of the competitive pricing in the illicit marijuana market.


Furthermore, political advancements at the federal level have been notably delayed compared to earlier industry expectations, resulting in failed expansion endeavors, unproductive infrastructure investments, and widespread price pressures, all culminating in diminished profit margins for the cannabis sector.


“The inability to accurately forecast when these dynamics will change, to decipher the political landscape effectively, presents significant challenges,” Karnes concluded regarding the ongoing financial setbacks. “This uncertainty remains a substantial obstacle.”


Emerging Trends and Future Outlook


Even in the face of economic uncertainty, several new developments in the cannabis sector point to possible directions for expansion and stability. The growing focus on cost control and operational efficiency is one such trend. Businesses are actively looking for creative ways to save expenses by simplifying their processes, allocating resources as efficiently as possible, and lowering overhead. These businesses want to improve their bottom line and lessen the effects of market and regulatory uncertainty by concentrating on efficiency.


The diversity of product offerings and market tactics is another noteworthy development. Companies that deal with cannabis are branching out from typical flowers and investigating new product categories including drinks, topicals, edibles, and wellness items. Targeting specialized markets and customer groups and customizing items to fit their requirements and tastes is also becoming more and more important. By lowering reliance on any one product or market segment, this diversification not only increases the variety of revenue streams but also fortifies the resilience of the market.


Looking ahead, the industry’s future prognosis is heavily reliant on regulatory developments and policy changes. The Biden administration’s prospective reclassification of marijuana from Schedule I to Schedule III may have far-reaching consequences for the business, including lower tax costs and better access to financial services. However, the timing and breadth of regulatory changes are unknown, providing hurdles for businesses navigating the changing regulatory landscape. Despite these uncertainties, ongoing innovation, strategic adaptability, and a focus on long-term sustainability will be critical in determining the cannabis industry’s resilience and development prospects in the coming years.


The other main problem the industry may never be able to overcome is, as Jeff Bezos put it so well, “your margins are my opportunity“.  Once the 280E tax breaks get worked through the system, and that cash bonanza gets dispursed, the industry will always face the unrelenting pressure of the illicit or black market.  As soon as prices start to get too high, where stores and brands start to increase margins, the illicit market will become that much more appealing for their lower prices.  If the legal industry tries to push prices too high, the black market will snag market share from more price conscious consumers.  There is a glass ceiling on how high the legal market will ever be able to raise their prices due to price pressures on the black market.


While consumers may pay for the appearance of safety through lab testing and the convience of a brick-and-mortar store, the fact remains that cannabis flower is 60% cheaper on the illicit market and edibles can be up to 93% cheaper when local and state taxes are taken into account. People will price shop when the spread between legal products and illicit products widen to unreasonable amounts.


Bottom Line


The cannabis industry’s financial struggles, as highlighted by the significant losses incurred despite substantial revenues, underscore the need for regulatory reforms and operational adaptations. While some companies have managed to thrive, many others have faced considerable setbacks, grappling with challenges ranging from regulatory constraints to market volatility. The emergence of new trends, such as cost management initiatives and product diversification, offers avenues for growth and resilience in the face of uncertainty. However, the industry’s future trajectory will largely depend on the pace and scope of regulatory changes, as well as companies’ ability to innovate and adapt to evolving market dynamics.


Margin compression and the ever-looming black market may always create a glass ceiling for cannabis product prices going forward. Push to hard on a string and the consumer will look to save up to 85% on prices by finding a new piece of twine.





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What Rescheduling Marijuana Means for California’s Cannabis Industry




California‘s cannabis industry suffers from a seemingly unending list of problems: high taxes, prohibitionist cities, a related lack of retail licenses and oversupply of non-retail licenses, a monster illegal market with no end in sight, burdensome and often senseless regulations, and so on. Unfortunately, rescheduling won’t solve most of these problems–at least not directly. Today I want to look at what rescheduling could mean for California’s cannabis industry.

If you’re not already up to speed on rescheduling, check out my colleague Vince Sliwoski’s explainer of the DEA’s notice of proposed rulemaking to move marijuana from schedule I (where it sits next to heroin) to schedule III, or any of the following posts of ours:

With that out of the way, let’s look how rescheduling could affect (or not affect) California’s cannabis industry.

First and foremost, rescheduling does not mean that state-legal cannabis markets will be federally compliant. In other words, all California cannabis businesses will still violate federal law. The biggest change would be that  IRC § 280E – which prohibits cannabis businesses from making standard federal tax deductions – will go away. But the statewide cannabis industry won’t be federally “legal.”

What that means is that rescheduling will have no impact on things like the prohibition on interstate commerce, which has kept California walled off from other states (at least California’s legal market). So for now, California’s still on its own.

Rescheduling also won’t impact state law where it counts. Things like local control, burdensome regulations, fighting the illegal market, and so on, will stay the same. Importantly, local and state tax law won’t change: California and many local cities tax cannabis businesses as if they are piggybanks. While 280E relief will undoubtedly help, it makes it much less likely that the state will revisit its own excise tax or think about how it could cap local gross receipts taxes.

So with all that out of the way, is there any good news? I think the answer is a clear yes. Here’s why:

  • Even without state and local tax relief, 280E relief alone will be a monumental change for the industry.
  • Investments into California’s cannabis industry are likely to increase as investors who previously stood on the sidelines become more comfortable with the idea of investing into a (slightly) less regulated industry.
  • Other ancillary service providers may also be more open to providing services to the industry for similar reasons. More ancillary service providers may reduce costs within the cannabis industry.
  • It’s possible that state governments also decide to be more bold. For example, states could decide to roll the dice on interstate commerce compacts after rescheduling, even in spite of schedule III issues.
  • Although the impact on the illegal market will likely be small, the removal of 280E liabilities could entice people who would otherwise have remained unlicensed to become legal and complaint operators.

We’ve got a long way to go before rescheduling happens. And while nobody can really say for sure how things will shake out, it seems like there are some definite positive outcomes for California’s cannabis industry. So stay tuned for more updates.

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The End of the US Hemp Industry is Near




end of hemp in america

The 2018 Farm Bill legalized the cultivation of hemp, distinguishing it from marijuana based on its low THC content. However, an emerging loophole has allowed the proliferation of psychoactive hemp-derived products, particularly delta-8 THC, which has led to significant regulatory and public health concerns. In response, a proposed amendment to the Farm Bill seeks to address these issues by banning hemp-derived cannabinoid products, including delta-8 THC. This proposed amendment, filed by Rep. Mary Miller (R-IL), aims to redefine hemp and close the existing loophole around intoxicating hemp. The amendment has sparked a heated debate among industry stakeholders, regulators, and lawmakers.

If you have followed the legal hemp market over the past 8 years and attended shows like the Benzinga Cannabis Conference, you know that the only thing keeping the US hemp industry alive, and on life-support at best, is the sale of commerical retail products that create revenue, ie, Delta-8 THC and Delta-9 THC products derived from hemp.  While hemp-crete and hemp twine are nice stories, the only “cash crop” hemp has right now is selling “hemp that gets you high” to Americans that don’t have acccess to legal weed.

As mentioned by a few VCs and investment firms at the industry trade shows, the only think keeping hemp alive in America is Delta-8 and Delta-9 THC products and sales.

That “loophole” in the original 2018 Farm Bill may be closing, and for good, with a new amendment put forward this week.


 Key Provisions of the Proposed Amendment

The amendment includes several critical provisions designed to tighten regulations on hemp-derived products:

  • Redefinition of Hemp: Redefines hemp to exclude products containing detectable levels of THC and cannabinoids synthesized outside the plant.

  • Ban on Delta-8 THC: Explicitly bans hemp-derived products that contain psychoactive cannabinoids, such as delta-8 THC.

  • Enhanced Regulatory Oversight: Aims to provide clearer guidelines and stricter controls over the production and sale of hemp-derived products.

 Concerns Leading to the Amendment

Proponents of the amendment argue that the current lack of regulation has led to several issues:

  • Marketing to Children and Teens: Psychoactive hemp products are often marketed in colorful packaging, resembling candy and snacks, raising concerns about their appeal to children and teenagers.

  • Unregulated Market: The proliferation of hemp-derived cannabinoids has resulted in an unregulated market where the safety and quality of products are inconsistent.

  • Public Health Risks: There are concerns about the potential health risks associated with the unregulated sale and consumption of these products.

 Industry Opposition and Concerns

Industry stakeholders and advocates for the hemp industry have voiced strong opposition to the proposed amendment. Their main arguments include:

  • Impact on CBD Products: The amendment could criminalize many non-intoxicating CBD products that naturally contain trace amounts of THC.

  • Economic Consequences: The ban could devastate the hemp industry, resulting in significant job losses and economic decline.

  • Access to Health Products: Many Americans rely on hemp-derived products for health and wellness, and the ban could deny them access to these beneficial products.

 Economic Implications

The hemp market is currently valued at approximately $28 billion, with a significant portion of this market driven by hemp-derived cannabinoid products. The proposed amendment could have profound economic implications, including:

  • Job Losses: Potential loss of tens of thousands of jobs in agriculture, retail, and manufacturing sectors.

  • Market Decline: A potential decline in sales and overall market value as many products would no longer be legally available.

  • Investment Uncertainty: Increased regulatory uncertainty could deter future investments in the hemp industry.

Regulatory Challenges

The hemp industry has faced numerous regulatory challenges since the legalization of hemp in 2018. Key regulatory hurdles include:

Lack of FDA Regulation: The FDA has yet to establish clear regulations for hemp-derived CBD products, creating a patchwork of state-level regulations and contributing to market instability.

  • Safety and Quality Standards: The absence of federal guidelines has led to inconsistent safety and quality standards across the industry.

  • Youth Access: The unregulated sale of psychoactive hemp products has raised concerns about youth access and potential misuse.

Legislative Process and Potential Outcomes

The amendment’s approval by the House Agriculture Committee is the first step in a potentially contentious legislative process. The Senate, which has yet to release its version of the Farm Bill, will play a crucial role in determining the amendment’s fate. Key considerations include:

  • Senate’s Stance: The Democratic-controlled Senate may take a different approach to the regulation of hemp-derived cannabinoids, potentially leading to a conflict between the two chambers.

  • Bipartisan Negotiations: Successful passage of the amendment will likely require bipartisan support and negotiations to reconcile differing viewpoints.

  • Final Legislation: The final version of the Farm Bill will need to balance the interests of public health, industry stakeholders, and regulatory clarity.

Broader Implications for Cannabinoid Regulation

The proposed amendment raises broader questions about the regulation of cannabinoids in general:

  • Defining Cannabinoids: The amendment’s language excluding detectable levels of THC and synthesized cannabinoids could impact the regulation of other cannabinoids, such as CBD.

  • Regulatory Parity: Proponents argue that the amendment would create regulatory parity and facilitate state-level regulation of intoxicating hemp products.

  • Future of Cannabinoid Products: The regulation of cannabinoids will continue to evolve, with ongoing debates about the safety, efficacy, and legality of various products.

 Public Health Considerations

The shift towards greater regulation of hemp-derived cannabinoids has significant public health implications:

  • Consumer Safety: Enhanced regulatory oversight could improve consumer safety by ensuring that hemp-derived products meet consistent quality and safety standards.

  • Health Risks: The unregulated sale of psychoactive hemp products poses potential health risks, particularly for vulnerable populations.

  • Research and Education: Increased research and public education efforts are needed to fully understand the health impacts of hemp-derived cannabinoids and inform regulatory policies.

Industry Adaptation and Future Outlook

The hemp industry will need to adapt to the proposed regulatory changes if the amendment is enacted. Key strategies for adaptation include:

  • Compliance and Certification: Producers and manufacturers will need to invest in compliance and certification processes to meet new regulatory standards.

  • Product Innovation: The industry may shift focus towards non-psychoactive hemp applications and develop new products that comply with stricter regulations.

  • Advocacy and Engagement: Ongoing advocacy and engagement with policymakers will be essential to ensure that the industry’s interests are represented in regulatory discussions.


The proposed Farm Bill amendment to ban hemp-derived cannabinoid products represents a significant shift in U.S. agricultural and regulatory policy. While proponents argue that it addresses critical public health and safety concerns, industry stakeholders warn of devastating economic consequences and the potential loss of beneficial products. As the amendment moves through the legislative process, the hemp industry faces a period of uncertainty and adaptation. The outcome of this debate will shape the future of hemp regulation, balancing the need for consumer protection with the growth and innovation of a burgeoning industry.





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Just Say No to Pesticides on Your Weed




pesticide free cannabis growing

How To Prevent Pests In Your Homegrown Cannabis Plants Without Using Harmful Chemicals


Just like every other plant, cannabis plants will also attract its fair share of pests and bugs when you try to grow them at home. Even professional cannabis growers have to deal with pests!

Pests come in the form of insects, fungus, mites, and bacteria. For homegrown marijuana, the most common offenders include aphids, thrips, spider mites, botrytis, cabbage loopers, whiteflies, powdery mildew, fungus gnats, and root aphids. When they go on undetected or without any treatment, they can cause a wide array of damage to your precious cannabis plant.


The worst-case scenario is that your plant can end up being so unhealthy and damaged, that you might even have to end up throwing it away before you can harvest anything. Sometimes, the pest problem can hide itself so effectively that you won’t even know it’s there until you’ve harvested your weed, and are opening your buds apart to smoke. Then, it would be far too late to do anything!


Many weed growers end up resorting to strong, harmful chemical pesticides and fungicides to prevent pest problems or nip them in the bud. However, these chemical pesticides and fungicides can also be dangerous for humans and the environment. They are, after all, made with chemicals – and some of these chemicals are known to be carcinogenic.


But don’t worry: there are several other ways cannabis home growers can deal with pests without harmful chemicals and strong pesticides.


Prevention Is Key


Truly understanding your home grow setup and operation is the first and most important step to preventing pests. This can take some time and resources in the beginning, but it will save you time and money in the long run!

There are certain factors involved with specific grow setups as well as environments. For example, when growing marijuana outdoors, the most common pests to deal with include aphids, Eurasian hemp borers, corn earworms, and hemp russet mites among others. You’ll also have to learn to prevent squirrels, deer, raccoons, and other bigger animals since humans aren’t the only ones that are attracted to weed!


Meanwhile, there’s a different set of beasts to deal with indoors because other factors are involved. These include humidity, ventilation, and air circulation. But regardless of whether you are growing indoors or outdoors, keep in mind that soil plays a critical role in preventing pests. Many growers have found success in using beneficial nematodes, which are microscopic and thus invisible roundworms that eat pests that thrive in soil. Nematodes are excellent for eliminating root aphids and fungus gnats; you can drench the soil in it or mix it up in water before irrigation.


Companion Planting


Companion planting is a common and widely practiced technique in farming as well as gardening. You can apply the principles of companion planting for cannabis cultivation; it entails planting certain plants or herbs next to cannabis which are known to create a symbiotic or beneficial environment. For example, certain plants or vegetables are known to equally feed off water, while other plants consume more water and thus leave their companion plants thirsty.


Meanwhile, some companion plants are effective in helping repel insects and diseases, which is why they are favored among cannabis growers. When it comes to companion planting, some plants to consider include marigolds, lavender, basil, and nasturtiums.


Beneficial Insects


Believe it or not, some insects can actually be good for your cannabis harvest. Lacewings and ladybugs are two of the most valuable types of insects for cannabis growers, especially if you are growing outside.

To ensure an abundant population, you can purchase beneficial insects and let them roam free in your greenhouse or grow area. They are fantastic for all kinds of plants, not just marijuana. Ladybugs and lacewings are particularly effective because they feed on spider mites, whiteflies, mealybugs, and other soft-bodied pests as well as larvae.


Organic Pesticides


There are several different kinds of effective organic pesticides and fungicides in the market, too. You can use them as a complement to other pest-prevention techniques that you are already doing. Adding organic pesticides to cannabis crop care and maintenance can help greatly deter pests especially if you find that other techniques are lacking or not working as well.

Organic pesticides come in the form of neem oil, insecticidal soap, and botanical sprays. Neem oil is a top choice when it comes to organic pest control, even among household plants! Keep in mind to use neem oil only during the vegetative growth cycle of marijuana.


 Just dilute two teaspoons of neem essential oil into a gallon of water, then spray. Or, you can also buy ready-to-use neem spray. Neem oil can be sprayed directly on the foliage, or you can also drench the soil in neem oil no matter what stage of growth your cannabis plant is in. It’s extremely effective in killing and preventing cannabis pests including leafhoppers, crickets, aphids, mealybugs, and so much more.


If you’re going to end up using foliar sprays, it’s important to buy the best-quality organic, natural sprays that you can afford. That’s because any ingredients used in those sprays are going to end up in the cannabis flower, which means that you’re going to end up smoking it. When it comes to the best time to use foliar spray on cannabis, it’s during the flowering cycle because it can help keep cabbage loopers and other pests off during this phase.



There are many creative ways you can get rid of pests effectively, whether you are growing cannabis indoors or outdoors. Follow these tips to ensure a healthy harvest without compromising your health or that of the environment – there’s no need to use nasty and highly toxic chemical sprays





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