Cannabis earnings kick into high gear this week with big names like Scotts Miracle-Gro, Green Thumb Industries, and Canopy Growth set to report. Analysts predict a difficult earnings season ahead as the industry struggles to match pandemic-era sales and consumers grapple with shifting economic conditions.

"Ahead of [Q2 2022] earnings season, we are lowering our U.S. cannabis company estimates and U.S. [total addressable market]. This is the first negative revision to our U.S. industry outlook and reflects the challenging consumer backdrop," Cowen analysts wrote in a note.

Scotts Miracle-Gro reports before the bell on Wednesday. The lawn and garden care company, which has a cannabis gardening and hydroponics-focused subsidiary called Hawthorne, cut outlook significantly during the summer.

"While it is encouraging that consumers have demonstrated lawn and garden activity remains an important part of their lifestyle, we did not see the replenishment orders we expected from our retailer partners since mid-May," Jim Hagedorn, Scotts Miracle-Gro CEO and chairman, said in a statement. "This surprising trend has put significantly greater pressure on our fixed cost structure that, when coupled with the commodity cost increases we have experienced since the start of the war in Ukraine, will cause us to fall well short of the revised financial targets we established in March."

Stifel analysts wrote in a note that they expect earnings-per-share to come in substantially below the previous year, and anticipate declines in total revenue, gross margin, and revenue for Hawthorne. 

Chicago-based multistate operator Green Thumb Industries reports after market close on Wednesday, and analysts at Cowen, which covers companies like Green Thumb Industries, Curaleaf, and Trulieve, wrote in a note that they expect more modest quarter-over-quarter growth from most U.S.-based multistate operators in spite of industry-wide retail sales ticking up about 6.5 percent. An explosion of growth in the cannabis industry during the early days of the COVID-19, due to factors like extra stimulus income, might also make it difficult for operators to keep up with last year's performance.

Canadian cannabis giant Canopy Growth is set to report before the bell on Friday, and Stifel analysts predict a decline in overall revenue, moderated slightly by growth in its global cannabis businesses. On the back of last quarter's earnings report, Canopy executives once again pushed back a goal to achieve positive adjusted EBITDA to 2024, according to Investors Business Daily. Shares of Canopy Growth have tumbled more than 70 percent year-to-date.

Constrained in a market smaller than California, Canadian cannabis companies have fixed their sights on the U.S. and other global markets to achieve growth and profitability. Senate Majority Leader Charles Schumer (D-N.Y.), Sen. Ron Wyden (D-Ore.), and Sen. Cory Booker (D-N.J.) officially unveiled their cannabis legalization bill in the Senate earlier this month, but experts aren't optimistic Democrats will pass federal reform before the midterm elections.

AdvisorShares Pure US Cannabis ETF (MSOS), which tracks major U.S.-based cannabis companies, has dropped roughly 56 percent since the start of the year. Inflation, Russia's war with Ukraine, and a possible recession have taken a toll on the sector. Whereas the industry's success during COVID-19 lockdowns prompted some to suggest cannabis was recession-proof, experts at cannabis advisory firm Viridian Capital Advisors wrote in a report that coming economic disruptions could be "less favorable for cannabis" than the last, which boosted the industry with money from stimulus checks and the essential status granted to cannabis businesses in many states.