The Cannabis Industry – the Good, the Bad and the Good Again!
Get the Latest on Post-Pandemic Cannabis Industry Performance
The good – as we witnessed, businesses around the globe shuttered as COVID-19 wreaked havoc on the global economy, however, the cannabis industry was considered an essential and as a result many companies in the industry did very well during the pandemic as reported by Investment Monitor.
The bad – here we are two years later and with skyrocketing inflation cannabis companies are having to reduce headcount, close dispensaries grow facilities or in some cases close completely. The cannabis industry in many ways is very much like other mainstream industries meaning they saw similar demand and now are struggling to overcome the challenges of rising costs.
The industries staff reductions and retractions have affected cultivation companies of all sizes as well as technical businesses servicing the cannabis industry. There are numerous reasons behind these recent developments including decreasing wholesale prices and cash-strapped consumers as a result of the highest inflation numbers we’ve seen in forty years. Even as the cost of other products continue to increase due to inflation, the price of cannabis continues to go down, according to MJBiz Daily.
Besides inflation, cannabis businesses are grappling with staffing issues. Many of the publicly traded cannabis companies are going through reorganizations, which includes the reduction of staff. A US based cannabis company, Aurora Cannabis just announced that it was cutting 12% of its workforce as part of a corporate reorganization, according to Ganjapreneur. Recently, Canopy Growth Corp., a Canadian based public company, announced that it will cut about 8% of its workforce as part of a companywide retraction phase. Canopy also closed its cultivation facilities on 23 acres in Ontario, last year.
The bottom line is the cannabis industry is volatile right now, and business are being acquired in all parts of the industry, not just cultivation and dispensing. Consolidation in the cannabis industry is happening all over. Production went up, but the number of businesses went down. A lot of today’s consolidation in the industry includes labor cost cutting and savings to the company, however if you are working in the industry, you may find yourself unemployed.
Yet another challenge facing the cannabis industry is venture capital funding which has become hard to come by. Cannabis businesses in general have historically relied on VC dollars to fund growth, so this is a particularly significant challenge to the cannabis industry
The good again – Despite all the current issues facing the cannabis industry, the long-term outlook is still impressive. Every year, analysts predict what the cannabis industry is worth, and every year that number exceeds expectations. Last year, annual cannabis sales reached $26.5 billion, and are expected to reach $32 billion in 2022.
New Frontier Data calculated the compound annual growth rate (CAGR) of the legal cannabis industry to be 11% between 2020 and 2030, ultimately putting the industry’s worth at more than $57 Billion by 2030. Wall Street suspects the industry will be worth substantially more by 2030, projecting its value to reach $100 Billion. With increasing consumer demand and new legal markets opening every year, that’s certainly a possibility.
How can we help take advantage of the good and alleviate the bad? – Cannabis cultivation and processing are a complex operation with unique requirements, and businesses servicing the Cannabis market deploy technology to process safe, reliable, and well-characterized cannabis products. At MaxQ Technologies, we provide the Cannabis ERP software that gives you seed-to-sale product tracking, and this allows you to take advantage of production and cost controls, and track every part of the extraction, production, testing, and packaging process.
Our commitment lies in providing you with affordable technology and business solutions that offer advanced functionality and unsurpassed ease of use. We want to provide our expertise and help you make this a success. To take advantage of the business opportunities that are in this thriving cannabis market, please contact us today and learn more.