Why Jobs in the Cannabis Sector Are Declining

Cheddar News reporter Chloe Aiello talks about the decline in jobs in the cannabis industry despite years of market growth.

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While the cannabis industry kicked off 2023 with just under 417,500 jobs. And that's down about 2% from the 428,000 jobs it supported at the start of 2022. This is unprecedented. Cannabis is a growth industry because more and more states continue to legalize. So the industry has consistently seen double digit job growth every year for the past decade until now. This doesn't mean that every state lost jobs. Some states like Missouri, Michigan, New Jersey and Florida added them but others particularly mature markets lost jobs. The most job losses about 12,600 came from California's industry followed by Colorado which lost about 10,500. Then Oklahoma which lost about 7200. And because cannabis is federally illegal jobs are not tallied by the Bureau of Labor statistics. That's why firms like cannabis job platform banks and in previous years legally have compiled them independently. Shannon. Ok. So a lot of people may be wondering how is it even possible for an industry that has demonstrated consistent growth to have contracted? Well, there are a number of reasons for this. So the cannabis industry is of course subject to the same sorts of pressures as every other industry and that includes surging inflation, rising interest rates and capital constraints. But that last bit, capital challenges is especially damaging to the industry. Right now. I spoke earlier to Carson Huston, founder and CEO of Banks. Take a listen to what she had to say. We saw V C funding down 96% year over year. We expected some form of safe banking and legislation to pass that did not go through investor sentiment is way down. And so when businesses want to grow and open more locations and expand, they need capital. And so the number one reason that we're hearing that these layoffs are happening is because of lack of capital investment is not flowing into the space as the economy has grown, less certain investors are fleeing to less risky sectors. As she said, BC funding is drying up. Plus cannabis companies don't have access to the same sorts of banking services as other companies. And this has resulted in layoffs from many major cannabis companies industrywide. But sure markets as she said have been especially hit hard too because they've been dealing with downward pressure on pricing amid oversupply issues resulting from a pullback in demand post COVID competition from the illicit market and over saturation of licenses in many markets, especially ones like California. Well, I know there are a lot of people that still want to get jobs in this industry. So when might we see growth in the cannabis industry once again? And also what could lead to the drive that? Well, it's worth mentioning again, that many markets are still hiring those that are ramping up in particular. So if you're willing to relocate to working in cannabis, there are opportunities now. But on the whole, he anticipates that job growth will kick off possibly as early as the summer. Once cannabis companies have downsized sufficiently and can return to profitability. She also mentioned that the right legislation could drive job growth especially in states, battling with entrenched illicit markets. Take a listen right now. People in New York are still purchasing and consuming cannabis but they're not doing it legally. So there's jobs in cannabis right now, but uh they're not regulated jobs. And so we hope that as the adult use program rolls out there, those jobs can move from the illicit market to the regulated market. So according to banks jobs report New York's market currently supports just over 2100 jobs but could support as many as 65,000. It's a major growth opportunity. Industry, insiders and enthusiasts alike have bemoaned the slow rollout of the legal market here in New York. Even as the illegal industry booms, the regulators have continued to defend a strategy that they say prioritizes equity in a measured march forward. Shannon. Yeah. Well, we're definitely still seeing a lot of these stores open up all over the city and all over the country. So it will be interesting to see what happens and how fast it rebounds.