After six years of explosive growth, employment in the cannabis industry is beginning to decline.
- Since more widespread legalization in the past decade, the cannabis industry has enjoyed double-digit job growth for nearly six years, but that is changing in 2023.
- Employment declined 2% this year, Forbes reports—shocking compared to the industry’s extreme growth over the last six years.
- The marijuana industry now represents a $26-billion sector as the sixth-most valuable cash crop in the U.S. This market reset could be a significant change for those in the business.
- One of the industry’s most significant challenges is the lack of capital. Cannabis venture funding is down 96%. Without investment, companies struggle to hire, Forbes reports.
- Other factors, including the end of the pandemic and poorly-executed legalization attempts, have added to the industry’s struggles.
Why it’s news
Now that 21 states and the District of Columbia have legalized cannabis for recreational use, marijuana sales have grown rapidly, now representing a $26-billion industry. A reset to this sector could mean a loss of jobs and revenue for the businesses supported by it.
After President Joe Biden was elected, investors and industry leaders were hopeful that marijuana could be legalized on the federal level. This legalization would give growers access to the American banking system that is currently unavailable to them. However, investors’ hopefulness declined when Congress did not vote on marijuana legislation in 2022.
Investing in the overall market has started to cool, but the cannabis industry is particularly affected because investors prefer to put their money in markets with access to the financial system and are likely to grow. Various pot stocks saw a 50% to 70% decline, Forbes reports.
While the industry was facing less interest from investors, it also began to experience less customer interest. The sector saw a rush of demand during the pandemic, but now that many have returned to work, customers have reduced the amount of marijuana they purchase. Purchases returned to pre-pandemic levels, leaving distributors with an over-staffing problem.
The average salary in the industry is around $40,000 per year. As the sector has lost a little over 10,000 jobs so far this year, Forbes reports. As the largest marijuana market, California saw the greatest decline. The industry in California generated 8.2% less in 2022 than in 2021—the first decline since legalization in 2018.
Part of the market’s volatility is due to more legalization nationwide. While marijuana users once traveled to places like Colorado to purchase cannabis legally, those same customers can now make purchases closer to home. Individual states may have a declining industry, but the nationwide industry is spreading.
States with more recent legalization, like Michigan and Missouri, have rapidly growing cannabis industries.