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Over 75% of Cannabis Companies Lose Money Every Year According to Whitney Economics

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A recent report from cannabis data and research company Whitney Economics reveals that just 24.4% of businesses in the U.S. cannabis sector are currently profitable. This is a drop 42% of cannabis companies being profitable on the past Whitney reports. This statistic highlights the ongoing struggles faced by the industry. In contrast, the previous year’s survey showed that 42% of marijuana businesses were reporting profits. The latest survey included 224 respondents from 13 states, representing approximately 1.1% of licensees in those states, as confirmed by Beau Whitney, the founder of Whitney Economics.

 

The objective of the survey, conducted by Whitney Economics, was to bridge the gap between theoretical business economics and the day-to-day experiences of cannabis operators. Respondents expressed various challenges, including the mounting pressure from rising costs and declining wholesale cannabis prices, which have necessitated the search for creative solutions. They also emphasized that state regulations have not kept pace with the evolving market and business conditions, indicating that regulatory frameworks can heavily influence success in the legal cannabis market. Additionally, a significant majority of respondents (over 70%) supported limiting the number of cannabis licenses, while high taxes remained a persistent concern.

 

The report’s outlook for the next seven quarters suggests a slower-than-normal growth trajectory due to the aforementioned factors, with no imminent expectation of significant changes. The survey also gathered valuable data on revenues, profits, profit margins, costs, and materials, providing a comprehensive snapshot of the current state of the U.S. cannabis industry.

 

According to the research, less than 25% of these operators can turn a profit, underscoring the industry’s serious problems. The sustainability and financial viability of cannabis enterprises in the current market are raised by this finding. It is clear that the US cannabis business is facing significant challenges that are impeding its ability to prosper economically because the majority of operators are struggling to earn a profit. These figures highlight the need for a deeper comprehension of what causes the low profitability rates and the creation of workable solutions to this urgent problem.

 

Projected Resolution of Recent Industry Challenges

 

The cannabis industry has faced recent difficulties, and additional states have encountered similar issues beyond those covered in the report. According to an interview with a cannabis sales worker in The Denver Post, businesses have been closing at an alarming rate, highlighting the market’s current struggles. In Colorado alone, retail sales in March experienced a $17 million decline compared to the previous year.

 

Curaleaf Holdings, Inc. (CSE: CURA) (OTCQX: CURLF), a major U.S. cannabis operator, made the decision to shut down the majority of its operations in Colorado, Oregon, and California this year due to concerns about financial viability. While two of these states were part of Whitney’s survey, Curaleaf’s CEO, Matt Darin, stated earlier this year that these regions might present future opportunities. However, due to price compression resulting from the illicit market’s lack of effective enforcement, the company struggled to achieve satisfactory returns on its investments.

 

Trulieve Cannabis Corp. (CSE: TRUL) (OTCQX: TCNNF), another U.S. cannabis distributor, saw a significant drop of $30 million in gross profit at the end of the first quarter of this year compared to the same period in 2022. Financial feasibility concerns led the company to close two of its California dispensaries. Over the past year, Trulieve’s share price declined by nearly 68%, reaching $5.36 on Thursday from $16.72 last June.

 

Despite these challenges, a report released by cannabis business intelligence firm New Frontier Data in March suggests that the industry will gradually overcome them. The firm’s CEO, Gary Allen, acknowledged that mature legal markets are experiencing price pressures due to factors such as inflation, high taxes, and competition from illicit markets. Additionally, the potential for a recession may impact cannabis consumer spending in the medium term. However, Allen emphasized that these challenges will not deter the long-term growth and increasing demand for legal cannabis.

 

New Frontier Data projects that the U.S. cannabis industry will generate $5 billion more in sales this year compared to 2022, indicating a positive trend and potential resolution of the current industry challenges.  Right now, the Canadian government is the most profitable cannabis company in Canada.

 

 

Research Highlights the Limited Success of US Cannabis Operators

 

The profitability crisis in the US cannabis industry is evident, as research reveals that a majority of operators are struggling to turn a profit. Less than 25% of cannabis businesses in the country are currently profitable, indicating significant financial challenges within the sector. This situation persists despite the increasing acceptance and legalization of cannabis in various states.

 

The limited profitability can be attributed to several factors. The industry’s complex and ever-changing regulatory landscape presents a major hurdle for operators. Varying federal, state, and local regulations result in higher compliance costs and operational complexities. Additionally, limited access to traditional banking services and tax limitations further burden cannabis businesses, impacting their financial health.

 

The intense market competition also contributes to the profitability crisis. The rapid growth of the cannabis market has attracted numerous entrepreneurs and investors, leading to a saturated industry. As competition increases, pricing pressures and thin profit margins make it increasingly difficult for operators to achieve sustainable profitability.

 

Furthermore, restricted access to capital poses a significant challenge for cannabis businesses. Due to the federal illegality of cannabis, many traditional financial institutions are hesitant to provide banking services or extend credit to operators. The lack of access to capital limits their ability to expand operations, invest in necessary technology and infrastructure, and ultimately scale their businesses toward profitability.

 

Addressing the profitability crisis necessitates a comprehensive approach involving industry stakeholders, policymakers, and regulators. Streamlining and harmonizing regulations, improving access to banking services, and providing financial support and resources to cannabis businesses are crucial steps toward creating a more conducive environment for profitability.

 

To survive and thrive, cannabis operators must prioritize sound financial management, operational efficiency, and differentiation strategies. By navigating the challenges and capitalizing on market opportunities, these businesses can work towards a more sustainable and prosperous future, ensuring the long-term viability of the US cannabis industry.

 

Bottom Line

 

The US cannabis industry faces a significant profitability crisis, with less than 25% of operators reporting profits. Complex regulations, limited banking access, intense market competition, and restricted capital hinder the financial success of cannabis businesses. To overcome these challenges, collaboration among industry stakeholders, policymakers, and regulators is essential to streamline regulations, improve banking services, and provide financial support. Cannabis operators must prioritize financial management, operational efficiency, and differentiation strategies to navigate the obstacles and secure a sustainable future. Addressing the profitability crisis is paramount for the long-term viability and prosperity of the US cannabis industry.

 

WHITNEY ECONOMICS ON WEED, READ ON…

WHAT CANNABIS COMPANIES ARE PROFITABLE

DID THE GREEN RUSH STALL? OVER 50% ARE LOSING MONEY?



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Latest Trump Weed Rumor – Trump Will Federally Deschedule and Decriminalize Cannabis, but Not Legalize It

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In a recent interview, former New Jersey Governor Chris Christie made headlines by asserting that President-elect Donald Trump will pursue significant reforms in federal policies regarding marijuana and cryptocurrency. As the nation grapples with evolving attitudes toward cannabis and the burgeoning digital currency market, Christie’s predictions have ignited discussions about the potential implications of such changes on both industries. This article delves into Christie’s insights, the current state of marijuana and cryptocurrency regulations, and the broader implications of these anticipated reforms.

 

The Current Landscape of Marijuana Legislation

 

Federal vs. State Laws

Marijuana remains classified as a Schedule I substance under the Controlled Substances Act (CSA), which places it in the same category as heroin and LSD. This classification has created a complex legal landscape where states have moved to legalize cannabis for medical and recreational use, while federal law continues to impose strict prohibitions. As of now, over 30 states have legalized marijuana in some form, leading to a burgeoning industry that generates billions in revenue.

 

Challenges Faced by the Cannabis Industry

 

Despite its legality in many states, the cannabis industry faces significant hurdles due to federal restrictions. These challenges include:

  • Banking Access: Many banks are hesitant to work with cannabis businesses due to fear of federal repercussions, forcing these businesses to operate largely in cash.

  • Taxation Issues: The IRS enforces Section 280E of the tax code, which prohibits businesses engaged in illegal activities from deducting normal business expenses, leading to disproportionately high tax burdens for cannabis companies.

  • Interstate Commerce: The lack of federal legalization prevents cannabis businesses from operating across state lines, limiting their growth potential.

 

Chris Christie’s Perspective on Marijuana Reform

 

Christie, a former presidential candidate known for his tough stance on drugs during his tenure as governor, has evolved his views on marijuana over the years. In his recent statements, he emphasized that Trump is likely to pursue descheduling cannabis, which would remove it from the Schedule I classification. This move would not only provide clarity for businesses operating in legal markets but also open avenues for banking and investment.

 

Christie highlighted that descheduling would allow for a more regulated market where safety standards could be established, thus protecting consumers. He believes that this approach aligns with a growing consensus among Americans who support legalization and recognize the potential benefits of cannabis use for both medical and recreational purposes.

 

The Future of Cryptocurrency Regulation = The Rise of Cryptocurrencies

 

Cryptocurrencies have surged in popularity over the past decade, with Bitcoin leading the charge as the first decentralized digital currency. The market has expanded to include thousands of alternative coins (altcoins), each with unique features and use cases. As cryptocurrencies gain traction among investors and consumers alike, regulatory scrutiny has intensified.

 

Current Regulatory Challenges

 

The cryptocurrency market faces several regulatory challenges that hinder its growth and adoption:

 

  • Lack of Clarity: Regulatory frameworks vary significantly across states and countries, creating confusion for investors and businesses.

  • Fraud and Scams: The rapid growth of cryptocurrencies has led to an increase in fraudulent schemes targeting unsuspecting investors.

  • Consumer Protection: Without clear regulations, consumers are often left vulnerable to risks associated with volatile markets.

 

Christie’s Vision for Crypto Regulation

 

Christie believes that under Trump’s leadership, there will be an effort to find a “sweet spot” for cryptocurrency regulation balancing innovation with consumer protection. He argues that overly stringent regulations could stifle growth in this emerging sector while too little oversight could expose consumers to significant risks.

 

In his view, a balanced regulatory framework would include:

 

1. Clear Definitions: Establishing clear definitions for different types of cryptocurrencies and tokens to differentiate between securities and utility tokens.

2. Consumer Protections: Implementing measures to protect investors from fraud while promoting transparency within the market.

3. Encouraging Innovation: Creating an environment conducive to innovation by allowing startups to thrive without excessive regulatory burdens.

 

Christie’s insights reflect a growing recognition among policymakers that cryptocurrencies are here to stay and that appropriate regulations are necessary to foster growth while safeguarding consumers.

 

Implications of Proposed Reforms

 

Economic Impact

 

The potential reforms proposed by Christie could have far-reaching economic implications:

 

  • Job Creation: Legalizing marijuana at the federal level could lead to significant job creation within the cannabis industry—from cultivation and production to retail sales.

  • Investment Opportunities: Descheduling cannabis would open up investment opportunities for institutional investors who have been hesitant due to federal restrictions.

  • Boosting Local Economies: Legal cannabis markets have proven beneficial for local economies through increased tax revenues and job creation.

 

Similarly, clear regulations around cryptocurrencies could stimulate investment in blockchain technology and related industries, fostering innovation and economic growth.

 

Social Justice Considerations

 

Both marijuana legalization and sensible cryptocurrency regulations have social justice implications:

 

  • Addressing Past Injustices: Legalizing marijuana could help rectify past injustices related to drug enforcement policies that disproportionately affected marginalized communities.

  • Financial Inclusion: Cryptocurrencies offer opportunities for financial inclusion for those underserved by traditional banking systems, particularly in low-income communities.

 

Political Landscape

 

The political landscape surrounding these issues is complex. While there is bipartisan support for marijuana reform among certain lawmakers, challenges remain in overcoming entrenched opposition. Similarly, cryptocurrency regulation has garnered attention from both sides of the aisle but requires collaboration to establish effective frameworks.

 

Conclusion

 

Chris Christie’s predictions about President-elect Donald Trump’s approach to federal marijuana descheduling and cryptocurrency regulation suggest a potential shift in U.S. policy that could significantly reshape both industries. As public opinion evolves on these issues, lawmakers have an opportunity to enact meaningful reforms that promote economic growth while ensuring consumer protection. The anticipated changes could foster a more robust cannabis industry that contributes positively to the economy and addresses social justice concerns, while clear regulatory frameworks for cryptocurrencies could encourage innovation and protect consumers in the digital economy. Stakeholders in both sectors are closely watching these developments, eager to see how potential reforms might impact their futures. While the realization of Christie’s predictions remains uncertain, it’s clear that the conversation around marijuana and cryptocurrency regulation is ongoing and far from settled.

 

TRUMP 2.0 ON CANNABIS REFORM, READ ON…

TRUMP ON MARIJUANA REFORM

TRUMP 2.0 ON FEDERAL CANNABIS REFORM – WHAT DO WE KNOW?

 



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Webinar Replay: Post-Election Cannabis Wrap – Smoke ’em if You’ve Got ’em

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On Thursday, November 7th, Vince Sliwoski, Aaron Pelley and Fred Rocafort held a post election discussion “Post-Election Cannabis Wrap – Smoke ’em if You’ve Got ’em”. Watch the replay!

Key Takeaways from the “Smoke ’em if You’ve Got ’em – 2024 Post Election Cannabis Wrap” Webinar:

  1. Panelists:
    • Vince Sliwoski: Oregon Business lawyer specializing in cannabis and commercial real estate.
    • Aaron Pelley: Experienced in cannabis law since Washington’s legalization in 2012.
    • Fred Rocafort: Trademark attorney working closely with the cannabis team.
  2. Election Results Overview:
    • Most 2024 cannabis ballot measures did not pass.
    • Florida, South Dakota, and North Dakota saw failures.
    • Nebraska became the 39th state to legalize cannabis for medical use when it passed two cannabis initiatives, Initiatives 437 and 438.
  3. Federal and State-Level Developments:
    • Medical use is currently legal in 38 states, and 24 states allow recreational use.
    • Republican support for marijuana legalization is growing.
  4. Federal Policy Implications:
    • Schedule III Rescheduling: The process to move cannabis to Schedule III is ongoing, which could significantly impact the industry.
    • Importance of Federal Appointments: The future of cannabis policy depends heavily on who is appointed to key positions in the administration.
  5. International and Domestic Trade:
    • Schedule III status could ease import/export restrictions on cannabis.
    • Unified control of House, Senate, and presidency might expedite legislative progress.
  6. Economic and Industry Impact:
    • Cannabis stocks experienced volatility post-election, reflecting investor uncertainty.
    • Federal legalization and banking reforms are crucial for industry stability and growth.
  7. Future Outlook:
    • The potential for federal rescheduling remains strong, with hearings scheduled for early 2025.
    • State-level initiatives and regulatory developments will continue to shape the industry.

Watch the replay!



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I Had Just One Puff

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“How Long Does One Puff of Weed Stay in Your System?”… This topic can be difficult to answer since it is dependent on elements such as the size of the hit and what constitutes a “one hit.” If you take a large bong pull then cough, it might linger in your system for 5-7 days. A moderate dose from a joint can last 3-5 days, whereas a few hits from a vaporizer may last 1-3 days.

 

The length of time that marijuana stays in the body varies based on a number of factors, including metabolism, THC levels, frequency of use, and hydration.

 

Delta-9-tetrahydrocannabinol, or THC, is the primary psychoactive component of cannabis. THC and its metabolites, which remain in your body long after the effects have subsided, are detected by drug tests.

 

Since these metabolites are fat-soluble, they cling to bodily fat molecules. They could thus take a while to fully pass through your system, particularly if your body fat percentage is higher.

 

THC is absorbed by tissues and organs (including the brain, heart, and fat) and converted by the liver into chemicals such as 11-hydroxy-THC and carboxy-THC. Cannabis is eliminated in feces at a rate of around 65%, while urine accounts for 20%. The leftover amount might be kept within the body.

 

THC deposited in bodily tissues ultimately re-enters the circulation and is processed by the liver. For frequent users, THC accumulates in fatty tissues quicker than it can be removed, thus it may be detectable in drug tests for days or weeks following consumption.

 

The detection time varies according to the amount and frequency of cannabis usage. Higher dosages and regular usage result in longer detection times.

 

The type of drug test also affects detection windows. Blood and saliva tests typically detect cannabis metabolites for shorter periods, while urine and hair samples can reveal use for weeks or even months. In some cases, hair tests have detected cannabis use over 90 days after consumption.

 

Detection Windows for Various Cannabis Drug Tests

 

Urine Tests

Among all drug tests, urine testing is the most commonly used method for screening for drug use in an individual.

 

Detection times vary, but a 2017 review suggests the following windows for cannabis in urine after last use:

 

– Single-use (e.g., one joint): up to 3 days

– Moderate use (around 4 times a week): 5–7 days

– Chronic use (daily): 10–15 days

– Chronic heavy use (multiple times daily): over 30 days

 

Blood Tests

Blood tests generally detect recent cannabis use, typically within 2–12 hours after consumption. However, in cases of heavy use, cannabis has been detected up to 30 days later. Chronic heavy use can extend the detection period in the bloodstream.

 

Saliva Tests

THC can enter saliva through secondhand cannabis smoke, but THC metabolites are only present if you’ve personally smoked or ingested cannabis.

 

Saliva testing has a short detection window and can sometimes identify cannabis use on the same day. A 2020 review found that THC was detectable in the saliva of frequent users for up to 72 hours after use, and it may remain in saliva longer than in blood following recent use.

 

In areas where cannabis is illegal, saliva testing is often used for roadside screenings.

 

Hair Tests

Hair follicle tests can detect cannabis use for up to 90 days. After use, cannabinoids reach the hair follicles through small blood vessels and from sebum and sweat surrounding the hair.

 

Hair grows at approximately 0.5 inches per month, so a 1.5-inch segment of hair close to the scalp can reveal cannabis use over the past three months.

 

Factors Affecting THC and Metabolite Retention

 

The length of time THC and its metabolites stay in your system depends on various factors. Some, like body mass index (BMI) and metabolic rate, relate to individual body processing, not the drug itself.

 

Other factors are specific to cannabis use, including:

 

– Dosage: How much you consume

– Frequency: How often you use cannabis

– Method of consumption: Smoking, dabbing, edibles, or sublingual

– THC potency: Higher potency can extend detection time

 

Higher doses and more frequent use generally extend THC retention. Cannabis consumed orally may remain in the system slightly longer than smoked cannabis, and stronger cannabis strains, higher in THC, may also stay detectable for a longer period.

 

How Quickly Do the Effects of Cannabis Set In?

 

When smoking cannabis, effects appear almost immediately, while ingested cannabis may take 1–3 hours to peak.

 

The psychoactive component THC produces a “high” with common effects such as:

 

– Altered senses, including perception of time

– Mood changes

– Difficulty with thinking and problem-solving

– Impaired memory

 

Other short-term effects can include:

– Anxiety and confusion

– Decreased coordination

– Dry mouth and eyes

– Nausea or lightheadedness

– Trouble focusing

– Increased appetite

– Rapid heart rate

– Restlessness and sleepiness

 

In rare cases, high doses may lead to hallucinations, delusions, or acute psychosis.

 

Regular cannabis use may have additional mental and physical effects. While research is ongoing, cannabis use may increase the risk of:

 

– Cognitive issues like memory loss

– Cardiovascular problems including heart disease and stroke

– Respiratory illnesses such as bronchitis or lung infections

– Mood disorders like depression and anxiety

 

Cannabis use during pregnancy can negatively impact fetal growth and development.

 

Duration of Effects

Short-term effects generally taper off within 1–3 hours, but for chronic users, some long-term effects may last days, weeks, or even months. Certain effects may even be permanent.

 

Bottom Line

The amount of time that cannabis remains in your system following a single use varies greatly depending on individual characteristics such as body fat, metabolism, frequency of use, and mode of intake. Frequent users may maintain traces of THC for weeks, whereas infrequent users may test positive for as little as a few days. Hair tests can disclose usage for up to 90 days, while blood and saliva tests identify more recent use. Urine tests are the most popular and have varying detection durations. The duration that THC and its metabolites are detectable will ultimately depend on a number of factors, including dose, strength, and individual body chemistry.

 

PEE IN A CUP COMING UP, READ ON..

how long does weed stay in your urine

HOW LONG DOES WEED STAY IN YOUR URINE FOR A DRUG TEST?



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