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Is the Cannabis Recession Here? – Cannabis | Weed | Marijuana

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1 year ago

April 14, 2023

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Is the cannabis recession here? According to a new study exclusive to Forbes, cannabis industry employment has declined, a first in history.

The 2% reduction comes after six years of double-digit growth. It can hardly be considered a sign of a cannabis recession. However, broader economic trends point to a recession, even a depression, on the horizon.

And the cannabis industry will not be immune to it. In fact, we may already be witnessing signs of the cannabis recession.

Is the Cannabis Recession Here?

According to the Forbes study, the cannabis recession is less about employment numbers and more about lack of capital.

Venture capital funding is down 96% year over year. In both America and Canada, banks have also been no help.

For the first two years of the Biden presidency, venture capital was kept alive by beliefs that the Democrat-controlled White House and Congress would legalize cannabis. Or, at the very least, pass some cannabis banking regulation.

But when 2022 ended without either, investors started putting their money elsewhere. Cannabis stocks have dropped 50% to 70% year over year.

We’ve covered the covid-inspired cannabis bubble before. That’s where the industry saw an artificial boom fueled by the “end of the world” mentality and the fact millions of people were under a sort of “public health” house arrest.

So people turned to alcohol and other drugs, gambling or adult content to cope with the stress or just simple boredom. Fortunately, many consumers chose benign, nontoxic cannabis for recreation.

But that boom is now over. Coupled with the lack of reform in the United States, the cannabis recession is here. Investors are dropping off, and revenues are down.

Budtenders and trimmers are losing work not because of performance but because the company needs more financial capital.

The cannabis industry is cash-strapped.

The Numbers

The Forbes study found that while most cannabis jobs are low-paying, there are enough to create massive economic value.

U.S. medical and recreational dispensaries accounted for $26.1 billion in legal sales. 31% of cannabis jobs are in farming, with retail stores making up 23%. The remaining work is in ancillary work, including marketing, distribution, legal services, manufacturing, and processing.

California experienced the most significant drop in employment – 13% from last year. That’s 12,600 fewer cannabis jobs than available last year.

This translated into an 8.2% drop in sales, the first time since the state legalized recreational cannabis in 2018.

However, California’s robust “illicit” legacy market – estimated to be 50% of the market – skew these numbers slightly. And because of California’s lack of legal stores and overproduction by legal growers, a price war has launched, resulting in wholesale cannabis prices dropping by 50%.

Colorado is down, too, with a drop in 28% of its cannabis workforce, or 10,481 workers. The state’s legal sales dropped from $2.2 billion in 2021 to $1.8 billion in 2022.

Oregon’s cannabis workforce is down by 21%.

However, we can explain many of these declines by neighboring states that have legalized. Consumers no longer have to go to Colorado or Oregon for legal weed.

And the numbers reflect this. Missouri just legalized and has hundreds of new retail stores. The same goes for Michigan, where cannabis jobs and revenue are growing.

Florida, too, which has the country’s largest medical cannabis market, saw 3,000 new jobs added.

But one wonders how much of this is sustainable in the long term. When the dust settles, will these new legal states maintain their current level of employment? Or will the cannabis recession come for them too?

Cannabis Recession In Canada?

Has the cannabis recession come to Canada’s legal industry? The Forbes study doesn’t address the Canadian market, but looking at the latest headlines tells the story.

For example, Canadian pot stocks have taken a beating.

Tilray’s stock fell nearly 60% in 2022. That’s down 93% from its all-time high. Considered an industry leader, Canopy has had a year-over-year decline of around 70%.

Canopy’s third quarter in 2022 saw the following:

$122 million decline in revenue
$1.83 billion operating expenses (up nearly 1000%)
Minus $2 billion in net income
Minus $5.38 in earnings per share, down from a positive number.

2022 also saw Aurora Cannabis decline by almost 80%. If you’d invested $1000 into Aurora in 2013 and cashed out right after legalization in 2018, you would have been $500,000 richer.

If you cashed out now? You’d have about $200.

Even ETFs have dropped. Marijuana Life Sciences, for example, saw a 46% decline in 2022.

Meanwhile, the Cannabis Council of Canada (C3) requests “immediate financial relief” from the federal government. They say excessive regulations, taxes, provincial distributor monopolies, and the general “stigma” of the industry have led to what is essentially a cannabis recession.

Is the cannabis recession here? It sure looks like it.

Will We See a Cannabis Recession in 2023?

The economy is heading to a recession because of the Federal Reserve in the United States. Interest rates are market-based prices for the money itself. “Setting” an interest rate like it were a public policy is engaging in price controls.

And price controls lead to surpluses and shortages. In this sense, an oversupply of money.

Since the Dot Com crash at the beginning of the millennium, the Fed has forced interest rates down. This fueled the housing bubble, which the Fed reinflated as an “everything” bubble.

And then covid happened, and governments started handing out money as if it was the money itself that was important.

But you can’t eat pieces of paper. It’s not the money that’s vital, but its purchasing power. And since the creation of the Federal Reserve, the purchasing power of the American dollar has declined year after year with no end in sight.

An economic depression may result in a covid-like demand for cannabis. But it remains to be seen how effective this will be at boosting America’s cannabis industry.

As for Canada, like most of its economic issues, the problem stems from too much intervention from federal and provincial governments.

For farmers and operators to survive a cannabis recession, the government simply needs to get out of the way.

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“A big deal”: What the feds’ move to reclassify marijuana means for Colorado cannabis

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13 hours ago

May 1, 2024

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Cannabis advocates in Colorado cheered the Biden Administration’s reported move to reclassify marijuana and said the decision likely would reduce businesses’ tax burden significantly.

Industry leaders cautioned that such a move — if finalized — would not resolve some major challenges facing the industry, such as limited access to banking. But they pointed to the symbolic importance of preparations by the U.S. Drug Enforcement Administration to downgrade the substance’s drug classification.

A man pours cannabis into rolling papers as he prepares to roll a joint the Mile High 420 Festival in Civic Center Park in Denver, April 20, 2024. (Photo by Kevin Mohatt/Special to The Denver Post)

Read the rest of this story on DenverPost.com.

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Astronauts to Test Cannabis Growth in Outer Space

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1 month ago

April 1, 2024

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NASA‘s recent collaboration with the International Space Research Consortium to launch a mission testing the cultivation of cannabis in the microgravity of space has stirred a whirlwind of interest and controversy across the globe. This initiative aims to unravel the mysteries of how low-gravity environments affect plant growth, with cannabis serving as the pioneering subject. According to Dr. Alfred Terra, the esteemed lead scientist spearheading the project, the conditions in space present an “unparalleled opportunity” to push the boundaries of our understanding of botany and its applications in medicine and agriculture beyond Earth’s confines.

This ambitious endeavor aims to shed light on the potential for utilizing space-based agriculture to support long-duration space missions and future colonization efforts on other planets. The choice of cannabis as a research subject is particularly intriguing due to its complex biochemical makeup and its increasing use in medicinal therapies on Earth. Insights gained from how cannabis adapts to space’s harsh environment could lead to breakthroughs in growing food and medicinal plants in extraterrestrial colonies.

Despite the scientific excitement surrounding the mission, the announcement has been met with its share of skepticism and criticism. Some members of the scientific community and the general public question the allocation of resources toward cannabis research in space, arguing that more pressing scientific and exploratory questions merit attention aboard the International Space Station (ISS). These critics call for a focus on projects that directly contribute to our understanding of space travel’s impacts on human physiology or further our knowledge of the cosmos.

However, the space agencies involved have been quick to highlight the broader implications of this research. They argue that studying cannabis growth in microgravity could offer invaluable insights into plant biology, stress responses, and the possibility of cultivating a variety of crops in space, which are crucial for the long-term sustainability of space exploration and eventual human settlement on other planetary bodies.

Amidst the debates over the mission’s merits and the speculation spurred by its announcement date—April 1st—lies a deeper curiosity about the future of space exploration and the role of innovative agricultural research in that journey. The timing has led some to question the announcement’s authenticity, pondering whether it could be an elaborate April Fool’s Day jest aimed at sparking discussion or simply a coincidence that has amplified the public’s fascination with the project.

Whether viewed as a bold step into the future of space agriculture or a controversial choice of research focus, the mission symbolizes a growing intersection between space exploration and the quest to understand and utilize biological processes in unprecedented environments. As the launch date approaches and preparations continue, the world watches, eager to see what insights this venture might unfold about cannabis, plant science, and the potential for life beyond Earth.

*** This article is an April Fool’s Day joke ***

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business

A Hiring Wave on the Horizon

Published

2 months ago

March 1, 2024

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The U.S. cannabis industry is on the brink of a significant hiring wave in 2024, spurred by a 12% increase in legal sales in 2023, reaching $29 billion. This growth, alongside potential federal reclassification of cannabis, is expected to create up to 100,000 new jobs, particularly in the retail sector, where 93% of companies plan to expand their workforce. The Vangst 2024 Cannabis Salary Guide highlights an industry ready to bounce back from previous economic stagnation, with a strong emphasis on experience, adaptability, and cultural fit in prospective employees.

The cannabis sector is poised for a massive expansion in employment opportunities in 2024, following a year of economic challenges and layoffs. This optimistic forecast comes from Vangst’s latest industry salary guide, which anticipates a hiring boom driven by increased legal cannabis sales and the potential for federal rescheduling. The anticipated move to reclassify cannabis to Schedule III could significantly reduce tax burdens, increase company valuations, and attract more investors, according to Viridian Capital Advisors.

Retail cannabis companies are at the forefront of this hiring surge, with nearly all surveyed indicating plans to bolster their teams in response to growing demand and market expansion. The focus is not just on filling positions but on finding candidates who can navigate the evolving legal and market landscape, prioritize cultural fit, and possess strong communication skills over traditional qualifications.

Salaries in the cannabis industry have also seen an uptick, with top-end wages growing by 4.7%, outpacing the national non-cannabis average. However, the sector still trails behind others in offering comprehensive benefits packages, a gap that affects employee satisfaction and retention. The demand for health insurance and better work-life balance is clear among job seekers in the cannabis space.

Diversity and inclusion are gaining traction within cannabis company hiring practices, with a significant portion of companies implementing strategies to create a more inclusive workforce. The industry’s employment of veterans and individuals with disabilities highlights its diverse nature, but there remains room for improvement.

Why It Matters: This hiring wave marks a pivotal moment for the cannabis industry, signaling a shift towards recovery and growth after a period of stagnation. It underscores the industry’s resilience and its potential to contribute significantly to the economy through job creation and increased sales.

Potential Implications: The anticipated hiring boom in the cannabis industry could lead to wider acceptance and normalization of cannabis use, further influencing policy changes and societal attitudes. Additionally, the focus on diversity and inclusion could set a precedent for other sectors, promoting a more inclusive workforce across industries.

Source: Green Market Report

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