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Fewer than 25% of U.S. Cannabis Businesses are Profitable: Survey

That's down from 42% the year prior.

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Whitney Economics, a cannabis economics data, consulting and research firm, has published the second annual Cannabis Operator Sentiment and Business Conditions survey report. The report is the result of an annual survey of U.S. cannabis business licensees. The report evaluates how cannabis industry operators view their success and what factors limit their growth. Further, it provides an outlook of future industry expectations.

Whitney Economics has established a baseline of data which is crucial to the success of the cannabis industry. The survey report highlights the fact that more data and greater transparency result in more confidence in the market and more confidence in potentially positive outcomes. The survey measured shortages and surpluses in materials, services and labor inputs against future expectations. Expected revenues, profits, margins, costs and other basic business measurements are also revealed. 

"By conducting this survey, Whitney Economics strives to bridge the gap between the theories of business economics and the daily lives of operators within the cannabis industry," said Beau Whitney, founder of Whitney Economics.

Key Findings include:

  • Less than 25% of cannabis operators in the U.S. report that they are profitable, which is down from 42% the year prior.
  • There is little relief in sight for operators; Whitney Economics is forecasting seven quarters of slower-than-normal growth.
  • Retailers and operators are feeling the pressure of rising costs and falling prices and have learned to do more with less.
  • While cannabis operators have been forced to pivot multiple times, they also have much more at risk, as they do not have access to normal business protections.
  • The success of cannabis businesses is largely dependent upon the regulatory structure of the states in which they are operating, and also dependent upon many other factors that are beyond their control.
  • Markets and business conditions have changed, while regulatory policies have not.
  • Over 70% of respondents favored some form of limited cannabis licensure structure, despite many of them coming from unlimited license states.
  • Cannabis legislative and regulatory policies have remained static, focused more on tax generation than on creating a viable, business friendly environment.
  • If policies are more industry focused and supportive of business, respondents feel that market conditions and operator sentiment will improve.
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