Fangst, A.; A business platform for the cannabis industry, has just revealed its 2023 annual report on employment in the cannabis sector. The report reveals a significant 2% decline in full-time equivalent jobs in the legal cannabis industry in the United States, bringing the total number down to 417,493. This marks the first annual decline in legal cannabis employment since the industry’s modern legal era began in 2012, which It makes him a surprising discovery.
Cannabis jobs reportAn annual compilation of employment figures for the US regulated cannabis industry, was created jointly by Leafly and Whitney Economics between 2017 and 2022. For this year’s report, Leafly assigned the task to Vangst, who is proud to publish the 2023 jobs report and carry on the tradition of providing statistics Reliable economic and updated information. The report’s authors, Bruce Barcott, author of the jobs report, and Beau Whitney, economist and founder of Whitney Economics, have resumed their leadership roles in producing the report.
Results report
According to Vangst’s 2023 Jobs Report, the Legal Cannabis Industry Supported 417,493 Full time equivalent positions in early 2023. This represents a decrease of 2% from the previous year, marking the first time in the history of legal cannabis that there has been a decline in job numbers. The cannabis industry, which has seen sustained double-digit job growth for nearly a decade, has halted new hires in 2022.
Despite growth in cannabis sales nationwide in 2022, there has been a shift in the labor market, which has seen employment decline even as new legal requirements promise to create thousands of jobs in 2023. Annual cannabis sales in the United States increased by $850 million In 2022, it represents a 3% increase from $25.25 billion in 2021 to $26.1 billion in 2022. Of note, this number includes all state-regulated medical and adult use sales, except for cannabis, delta-8, and CBD, and unregulated sales.
Number of Full Time Equivalents (FTE) Jobs supported by cannabis sales In the United States depending on the legal status of the country. In 19 states that are completely legal for adult use, cannabis sales as of February 2023 supported 321,361 FTE jobs, while in just 21 medical states, they supported 96,132 jobs.
What caused job losses in 2022?
The regulated cannabis industry in the United States has faced many economic challenges over the past year, putting every company in the cannabis sector to the test. A combination of factors, including global inflation, interest rate increases, reduced investor enthusiasm, lower wholesale prices for cannabis, and post-pandemic changes in consumer demand have all affected the continued growth of the industry. Over the past six months, staff cuts have affected nearly every major cannabis brand.
The cannabis industry saw a significant increase in revenue during the Covid years but a decline in demand as the pandemic subsided. Millions of Americans, feeling stressed and constrained at home, have turned to cannabis for enjoyment and relief, driving nationwide sales up 20% in 2020 and 2021.
This is beyond what would be considered “normal” growth. The cannabis industry, like other essential stay-at-home sectors like Netflix, Uber Eats, Amazon and Zoom, has hired additional staff to meet the sudden surge in demand. However, when the pandemic began to subside in 2022, cannabis demand fell to pre-pandemic levels.
As a result, many companies have found staffing levels unsuitable for the new normal. However, despite this, cannabis sales increased in 2022. But how can there be a decline in employment with a 3% increase in sales? Well, hiring doesn’t always follow sales in an exact pattern. While revenue is an important factor in a company’s headcount, other factors include cash on hand, business confidence, investment capital, long-term and short-term growth potential, and the company’s business strategy.
In the legal cannabis industry, jobs have typically been supported by significant sales revenue and investment capital. However, in 2022, the global investment climate will directly impact employment and employment levels in the industry. Instead of hiring to expand and gain market share, companies in 2022 cut staff to align payroll with current and projected revenue. Cannabis companies that will be successful in 2023 rely primarily on earned income rather than investment capital.
Will job growth recover in 2023?
In fact, job growth is expected to resume in 2023. The second quarter of the year is expected to see a pickup in hiring as cannabis companies become safer and more confident with their newly established earned revenue base.
With wholesale prices for cannabis stabilizing, and businesses based in mature markets experiencing steady organic growth, hiring is expected to expand quietly. On the other hand, in emerging markets, the number of corporate employees is expected to increase significantly. We are already seeing an increase in hiring in newly opened legal markets such as Missouri, New Jersey, New York, New Mexico, Rhode Island and Connecticut.
If policymakers in legal cannabis states team up to bring consumers from the vintage market to licensed, tax-paying stores, the untapped potential in the industry, worth billions of dollars, can be realized. This could lead to a return to double-digit employment growth.
Conclusion
Despite facing economic and labor market hardships, the legal cannabis business in America has hope for the future. The sector is still expanding, and sales are rising despite a slight decrease in jobs in 2022. This shows that there is a high demand for cannabis commodities. While the pandemic boosted the industry, restoring normalcy has brought home the value of sustainable revenue streams and ethical business practices.
The weed sector is expected to increase in the future as new markets develop and existing markets grow larger. There is a huge opportunity for politicians to support the growth of the industry while helping the greater society with more tax revenue and jobs, as there is potential for billions of dollars in untapped revenue.
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