Most Cannabis Companies Underperformed Last Year, Need Funding to Survive

April 19, 2023 · Green Market Report

Several factors will combine to make 2023 a year of attrition.

Last year’s global cannabis market underperformed expectations, most companies will need funding to survive the coming year, and the industry outlook is “bleak.”

Those are some of the broad takeaways from a new report released this week by Ernst & Young Global Limited, an international cannabis consultancy. The informal poll, titled the “EY Global Cannabis CEO Survey,” was conducted between December and January.

There were roughly 50 respondents, including 28% from Canada, 20% from the United States, and the rest from Europe, South America, Australia, and Israel.

Among the findings:

  • Roughly 58% of companies fell short of financial performances expected by their boards of directors.
  • 57% of companies said they’d need more funding to survive the next 12 months.
  • More than 13% used layoffs to reduce costs in 2022.
  • 55% are expecting a good number of their competitors to exit the cannabis industry in 2023.

“While the cannabis market is expected to sustain its growth (albeit at a decelerating rate), the consensus outlook for the industry in 2023 is bleak,” the report concluded. “The cannabis industry is poised to experience its version of the dot-com bubble burst of 2000.”

The report asserted that cannabis executives believe several factors will combine to make 2023 a year of attrition, including:

  • Inflation
  • The expensive cost of capital
  • Increasing competition
  • Price compression
  • Margin pressure

“The theme for the short-term is ‘survival of the fittest,’” the report quipped. “A significant number of cannabis companies are expected to either collapse or become insolvent.”

The report attempted to put a rosy spin on the outlook as well, and forecasted that despite the likely failure of many cannabis companies – particularly in North America – the “long-term outlook on the industry is positive.”

It noted that the cannabis market just in the United States alone is estimated to be worth $100 billion, of which only about $25 billion is so far being bought and sold legally.

“In the future, we believe greater acceptability with legalization and innovation should boost that number,” the report stated.

But the bottom line is that first there’s going to be pain. And probably lots of it.

“After years of fast growth, the industry is expected to face a reset,” the report predicted. (Full Story)

In category:Business
Next Post

Green Market Report Women’s Leadership Awards: Rachel Edwards

Rachel Edwards heads research and development for Statehouse Holdings. Best Cultivation: Rachel Edwards, Statehouse Holdings Statehouse Holdings (CSE: STHZ), a leading player in the California cannabis industry, has made great strides under the guidance of its research and development manager, Rachel…
Read
Previous Post

Skymint Chairman, CEO Out as Company Battles Through Receivership

The chairman and CEO of troubled Skymint is out as the company battles through court-ordered receivership. “We can confirm that Jeff Radway is no longer with Skymint,” the company said in an emailed statement Tuesday. “As we work through this…
Read
Random Post

The Healer

Culture is multifaceted and encompasses many disciplines including the arts, food, sports and pop culture, each with its share of larger-than-life celebrities and thought leaders. When the lives of these personalities intersect with cannabis culture, their experiences can shed light…
Read
Random Post

Organigram takes Canadian government to court over cannabis lozenge dispute

Canadian marijuana operator Organigram Holdings is asking a federal court to quash a Health Canada decision that the company’s popular ingestible cannabis lozenges should be classified and regulated as edibles instead of extracts. The legal challenge could have broader implications for Canada’s…
Read
Random Post

Fewer research analysts covering cannabis underscores industry woes

Cannabis industry earnings calls have been a little quieter this year. Fewer research analysts are covering the U.S. marijuana industry, which experts say reflects the challenging economic headwinds facing the industry, including high taxes, high interest rates, rock-bottom stock prices…
Read
Random Post

Want Better Tasting Wine, Grow Hemp Plants in Your Vineyard Says New 3-Year Agricultural Study

A comprehensive study has been conducted over three years in a Marlborough Sauvignon Blanc vineyard by grape grower Kristy Harkness and viticulture researcher Dr. Mark Krasnow. The study has demonstrated that hemp is a viable cover crop, particularly within New Zealand's Sauvignon Blanc…
Read