Growth Despite Headwinds

Cannabis cultivation companies report increased revenues in industry study despite challenges of 2020.

There is much debate about the cause of the labor shortage in the U.S., but employers in many industries are reporting that it is incredibly difficult to find employees to fill available jobs.

Interestingly, while many other sectors of the U.S. economy struggled with hiring during the past year, this was not a top-cited problem in the cannabis cultivation industry, according to results from Cannabis Business Times’ 2021 “State of the Cannabis Cultivation Industry Report.”

For the past six years, CBT has taken the pulse of the cannabis cultivation market with the annual “State of the Cannabis Cultivation Industry Report,” asking readers to anonymously share information about how their companies have performed in the past year. Since 2018, CBT has asked participants to note their top three business challenges, and “finding employees” has never ranked among the top. That remained true in 2021’s report, even though hiring has been difficult for many other industries.

Each year, other more industry-specific struggles such as “compliance with local and/or state regulations” (2021: 34%), “financial management (including banking, 280E)” (31%) and “declining prices” (28%) have ranked higher. Comparatively, in 2021, 14% of cannabis cultivators who participated in the study cited hiring as a top challenge. Among 16 answer choices provided, “finding employees” ranked 10th. This has not changed since 2018, when 13% of participants noted hiring as among their top challenges. However, when looking at data from participants who extract and process cannabis exclusively, a slightly higher percentage (21%) cited hiring as a pressing challenge; but it remained lower than other industry threats.

While this doesn’t mean that hiring is easy in the cannabis industry, it’s one more example of how the market remains an interesting outlier.

Another example of this can be found in 2020 cannabis market growth. While the U.S. Bureau of Economic Analysis announced the U.S. economy overall shrank by 3.5% in 2020, representing the largest number in more than 70 years, according to the AP, the cannabis industry grew. According to CBT’s “State of the Cannabis Cultivation Industry Report,” nearly a third (31%) of cannabis cultivators noted increased revenue, 17% said there was no change, and only 5% said revenue decreased. And, 44% could not compare as their businesses have not been in operation for more than two years, meaning there continue to be many new entrants to the market.

According to BDSA, global cannabis sales reached $21.2 billion in 2020, a 48% year-over-year increase compared with 2019, as noted in Fast Stats. And, Leafly reported the industry created more than 77,000 jobs in 2020, a 32% jump from the previous year.

There are myriad reasons for this boom, including the fact that most states designated cannabis businesses essential during COVID-19 pandemic shutdowns, consumer demand continued, and in some cases, increased during 2020, and adult-use markets like Illinois and Michigan had just come online. Despite the industry’s persistent and unique challenges due to its federally illegal status, and a pandemic that halted the world, the cannabis industry largely persevered. So far, there seems much to be optimistic and hopeful about in 2021, and beyond.

June 2021
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