The Marijuana Industry’s Expected Decline… Maybe

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The cannabis industry was booming, there were profits to be made and jobs were plentiful. The government assistance and remote working during Covid-19 contributed to the large boom. But as Covid-19 seems to simmer down, recently the sector has seen a steady decline in late 2022, and this trend is unfortunately expected to continue in 2023. Sara Gullickson, CEO and founder at The Cannabis Business Advisors explains, “I don’t think layoffs have peaked. I think this will continue into 2024 for sure.” This is marked by companies laying off significant portions of their staff due to falling wholesale prices and weakened demand. The effects are being felt by all ranges of companies: from large multistate corporations to small tech businesses. The dip is even being felt at the C-suite level, with several major executives leaving the industry.

The damage can be felt all over the country. Some examples of companies laying off workers follows:

Florida cannabis marketing technology company Springbig reduced its workforce by 23 percent citing “layoffs and attrition”
Cannabis tech company WM Technology, which is responsible for Weedmaps, reduced its workforce by 25 percent in November. Three Chief level employees also subsequently left the company.
Seattle based cannabis commerce platform Leafly Holdings cut 21 percent of its workforce in October, with another chief level employee resigning in December.
Oregon-based cannabis retail technology firm, Dutchie, laid off 8% of its workforce in June and instituted a second round of layoffs in November.

As to what is causing the sharp declination of the cannabis sector there are a few ideas. With a looming economic recession consumers could be looking to cut back their superfluous spending. With a weakening demand, investors are hesitant to enter the market. Combined with the fact that due to federal regulations, access to capital has always been tough for cannabis businesses. The primary threat to entering the market being marijana is an illegal substance at the federal level.

There is truly no reason to act as if the sky is falling though. Vangst founder and CEO Karson Humiston says that, “Cannabis already went through a ‘canna-cession’ in 2019. The best cannabis businesses quickly cut fat, focused deeply on fundamentals and are thriving today. The worst cannabis companies have died.” Meaning that with any new sector there is going to be some die-off while the truly best companies grow. Lastly, it is important to remember that more and more states are legalizing marijuana meaning there are more consumers entering the market. Creating room for growth, profits, and jobs.

Sources: MJ Biz Daily, FlowHub

Images: Pexels