Vangst, a job platform for the cannabis industry, has just unveiled its 2023 annual report on employment in the cannabis sector. The report reveals a notable decrease of 2% in full-time equivalent jobs within the legal cannabis industry in the United States, bringing the total number down to 417,493. This marks the first year-over-year decline in legal cannabis employment since the industry’s modern legal era began in 2012, making it a surprising finding.
The Cannabis Jobs Report, a yearly compilation of employment figures within the regulated cannabis industry in the US, was co-created by Leafly and Whitney Economics between 2017 and 2022. For this year’s report, Leafly has entrusted the task to Vangst, who takes pride in publishing the 2023 Jobs Report and carrying forward the tradition of delivering reliable economic statistics and up-to-date information. The report’s authors, Bruce Barcott, the creator of the Jobs Report, and Beau Whitney, the economist, and founder of Whitney Economics, have resumed their leadership roles in producing the report.
According to the 2023 Vangst Jobs Report, the legal cannabis industry supported 417,493 full-time equivalent jobs in early 2023. This represents a 2% decline from the previous year, which marks the first time in the history of legal cannabis that there has been a decrease in job numbers. The cannabis industry, which had seen unbroken double-digit job growth for almost a decade, halted new hiring in 2022.
Despite the growth in cannabis sales nationwide in 2022, there was a shift in the job market, which saw a decline in employment even as new legal needs promised to create thousands of jobs in 2023. Annual cannabis sales in the US increased by $850 million in 2022, representing a 3% rise from $25.25 billion in 2021 to $26.1 billion in 2022. It is worth noting that this figure encompasses all state-regulated medical and adult-use sales, excluding hemp, delta-8, CBD, and unregulated sales.
The number of full-time equivalent (FTE) jobs supported by cannabis sales in the US varied depending on the state’s legal status. In the 19 fully legal adult-use states, cannabis sales as of February 2023 supported 321,361 FTE jobs, while in the 21 medical-only states, they supported 96,132 jobs.
What Caused The Decline In Jobs In 2022?
The regulated cannabis industry in the US has encountered several economic challenges over the past year, putting every company in the cannabis sector to the test. A combination of factors, including global inflation, increasing interest rates, decreasing investor enthusiasm, lower wholesale cannabis prices, and a change in post-pandemic consumer demand, have all impacted the industry’s constant growth. Over the last six months, staff cuts have affected nearly every major cannabis brand.
The cannabis industry experienced a notable increase in revenue during the Covid years but a decrease in demand as the pandemic subsided. Millions of Americans, feeling stressed and constrained at home, turned to cannabis for enjoyment and relief, resulting in a 20% increase in nationwide sales in 2020 and 2021.
This surpasses what might be considered “natural” growth. The cannabis industry, like other essential stay-at-home sectors such as Netflix, Uber Eats, Amazon, and Zoom, hired additional staff to meet the sudden surge in demand. However, when the pandemic began to wane in 2022, cannabis demand decreased to pre-pandemic levels.
As a result, many companies found staffing levels unsuitable for the new normal. However, despite this, cannabis sales increased in 2022. But how can there be a drop in employment with a 3% increase in sales? Well, hiring does not always follow sales in an exact pattern. While revenue is a significant factor in a company’s headcount, other factors include cash on hand, business confidence, investment capital, long-term and short-term growth possibilities, and a company’s business strategy.
In the legal cannabis industry, jobs have typically been supported by substantial revenue from sales and investment capital. However, in 2022, the global investment climate directly impacted the industry’s hiring and staffing levels. Instead of hiring to expand and gain market share, companies in 2022 reduced headcount to align payroll with current and projected revenues. The cannabis companies that are succeeding in 2023 are primarily relying on earned income rather than investment capital.
Will job growth recover in 2023?
Indeed, it is anticipated that job growth will resume in 2023. The second quarter of the year is expected to see a resurgence in hiring as cannabis companies become more secure and confident with their newly established earned-revenue base.
As wholesale cannabis prices stabilize and established companies in mature markets experience steady organic growth, hiring is expected to expand quietly. On the other hand, in emerging markets, company headcounts are expected to rise exponentially. We are already witnessing a surge in recruitment in newly-opened legal markets such as Missouri, New Jersey, New York, New Mexico, Rhode Island, and Connecticut.
If policymakers in the legal cannabis states collaborate to bring consumers from the legacy market into licensed and tax-paying stores, the untapped potential in the industry, which is worth billions of dollars, could be realized. This could potentially lead to the resurgence of double-digit hiring growth.
Despite facing economic and job market difficulties, the legal cannabis business in America has cause for hope for the future. The sector is still expanding, and sales are rising despite a slight job reduction in 2022. This shows that there is a high demand for cannabis goods. While the epidemic boosted the industry, restoring normalcy has brought home the value of sustainable revenue sources and ethical business practices.
The weed sector is expected to increase in the future as new markets develop and existing ones get older. There is a significant opportunity for politicians to support the industry’s growth while assisting the larger community through more significant tax revenues and job opportunities, as there is the potential for billions of dollars in untapped revenue. (Full Story)