While cannabis businesses are becoming more mainstream, thanks to evolving regulations across the U.S., “the industry is hurting” and only 42% of respondents are turning a profit, according to a new report.
The new U.S. Cannabis Business Conditions Survey Report, released by consulting firm Whitney Economics, shows how cannabis industry operators are viewing the success of the cannabis industry and what factors are limiting their growth. Their number one concern is a lack of banking or financial services followed by market volatility, big business competition and taxes, according to the report.
“Operators are kept up at night worrying about how to survive in an environment where there is little support, extremely strong competition from illicit dealers from one side, and the existential threat of corporate competition on the other,” Beau Whitney, founder and Chief Economist at Whitney Economics, said in a statement. “The only solution for operators is to advocate for a level playing field and hope that reform will occur sooner, and not later.”
In terms of profitability, 20% of the respondents reported making no money, while 37% reported that their businesses are not profitable.
Women respondents and non-white respondents are faring much worse than white, male respondents, with 45.6% of male respondents indicating they were turning a profit, versus 37.5% of female respondents, according to the survey.
The survey also notes that from a demographic perspective, the data show that the further an operator is from being white and male, the less likely they are to be turning a profit in the U.S. cannabis market.
“The implication of this observation, which is based upon the data, is that current business conditions, including regulations and policies, are disproportionately impacting women-owned and minority-owned businesses. It is clear that operating a profitable cannabis business is not easy for anyone regardless of whether one is operating in an emerging state market or a mature state cannabis market. For the market to improve, systemic changes need to be made at both the state and federal levels. In their written responses, cannabis license owners were very vocal that their industry will need the support of state and federal policymakers in order to survive and prosper,” according to the survey.