The Cannabis Job Market Contracts for the First Time Since 2016 – The New Reality or Statistical Anomaly?

September 13, 2023 · Cannabis.net

The regulated marijuana industry is grappling with significant challenges, particularly in the cannabis labor market. Recent headlines reveal that many employers, from large multistate operators to small cannabis businesses and related ancillary companies, have been compelled to reduce their workforce. Perhaps most notably, the past year marked the first contraction in the number of cannabis-related jobs in the United States since regulated marijuana markets were established. This unsettling development was detailed in a February 2023 report by Vangst, a Denver-based recruitment firm specializing in the marijuana industry.

The decline in national cannabis industry employment, unthinkable just a year ago, can be attributed to a combination of factors. These include global inflation, plummeting cannabis prices, a scarcity of investment capital, and market oversaturation in established regions, all of which have prompted many marijuana companies to implement layoffs, as outlined in Vangst’s report. In early 2023, the industry boasted approximately 417,493 jobs, encompassing both plant-touching and non-plant-touching roles, reflecting a 2% drop from the 428,059 positions recorded by Vangst a year prior.

The once-flourishing era of the “Great Resignation” has given way to uncertainty and job security concerns among cannabis industry workers. Fewer job postings by cannabis businesses and a shifting employment landscape have transformed it into an employer’s market. As Karson Humiston, CEO of Vangst, aptly noted, the days of candidates demanding substantial pay increases to remain with a company have ended.

Nonetheless, there are glimmers of hope that the cannabis industry can rebound as a substantial job creator. For instance, regions with newly established adult-use markets, such as Maryland and Missouri, are experiencing a surge in hiring, offering a positive outlook amid the industry’s broader labor challenges. Amidst this tumult, several noteworthy labor trends have emerged, urging cannabis executives to be strategic and consider temporary staffing solutions to navigate these uncertain times.

Employers in Control

Experts underscore employers’ substantial advantage over employees in the current labor landscape. This advantage is particularly pronounced due to the wealth of top-tier talent now available for weed businesses to tap into, as Bernard highlights. This presents a unique opportunity for organizations to strategically bolster their teams with additional executives. The readily available pool of candidates in the job market facilitates this process.

Concurrently, as companies undertake workforce reductions, there’s a growing expectation for the remaining employees to shoulder increased responsibilities, evoking a return to an earlier era when executives wore multiple hats. For example, individuals who previously managed specific aspects, like Metrc, now oversee a broader range of functions, including quality assurance and compliance. Roles once distinct and held by separate employees have now been consolidated into unified positions.

While those currently employed in the cannabis industry may consider themselves fortunate, newcomers face mounting challenges in entering the field. Firms increasingly seek candidates with prior cannabis industry experience, and the job market is saturated with eager applicants, as Bradford highlights.

Most severely affected are positions in middle management, human resources, and marketing. Middle managers often bear the brunt of layoffs when companies aim to reduce their workforce. This decision is strategic, as maintaining a balanced ratio of employees to managers is crucial for effective support and development. Consequently, streamlining organizations often involves reducing layers of middle management.

Additionally, positions perceived as “non-revenue-generating,” such as human resources, marketing, and compliance, have seen significant cutbacks, prompting many companies to outsource these functions to third-party providers. One exception to this trend in the current job landscape is hourly positions, which have remained relatively unaffected. Roles such as cultivators, manufacturers, harvesters, extraction technicians, and packagers remain crucial for delivering products to market, contributing to the sustained demand for such positions within the industry.

Adapting to Temporary Workforce Solutions

The prevailing economic uncertainty has prompted numerous companies to embrace temporary workers, fractional staff, and consultants as a cost-effective and flexible alternative to hiring permanent employees.

One notable advantage is that employers are not obligated to provide temporary workers with full-time benefits, as highlighted by Bernard. This flexibility allows companies to engage talent as needed, offering them the agility to swiftly bring in expertise without navigating a protracted formal hiring process.

Opting for temporary arrangements also allows companies to assess individuals in action before committing to a permanent role, assuring their performance and alignment with the company culture, as explained by Bernard.

A noticeable trend in the industry is the transition toward a hybrid workforce model, where only key executive positions are filled with full-time employees, according to Bernard. This shift allows businesses to maintain flexibility and adapt to evolving needs.

Within this context, CannabizTeam’s temporary staffing division is experiencing increased demand from MSOs (Multistate Operators), focusing on entry-level positions to support pre- and post-harvest operations and roles within manufacturing and packaging lines, noted Bernard.

Cannabis Job Growth in the East

The bulk of layoffs within the cannabis industry has primarily occurred in well-established Western markets, with California, in particular, experiencing the most significant decline in cannabis industry employment.

Nonetheless, the Eastern cannabis sector has emerged as a hub of job growth, attracting workers from the West to the East.

Bernard noted that the newly licensed entities in Eastern states are actively recruiting talent and strongly favor individuals with prior cannabis industry experience. To entice experienced workers, these companies offer improved benefits, higher salaries, and, in many cases, cover relocation expenses. This trend is fostering a noticeable shift of talent towards the Eastern markets.

She elaborated on the situation, stating, “Maryland is currently witnessing substantial activity in cultivation and manufacturing, driven by the need to meet the demand generated by adult-use legalization. This has led to significant hiring across various verticals, including cultivation, extraction, manufacturing, retail, and executive positions in these states.”

Moreover, Bernard highlighted that many East Coast natives who ventured westward to work in the cannabis industry are returning to their home regions due to these new opportunities in the East.

Losing Talent

A pressing issue within the marijuana labor market revolves around the potential departure of hourly and salaried workers from the cannabis sector to seek opportunities in other industries. These alternative sectors often present more enticing compensation and benefits packages, compounding the industry’s existing challenges.

Bradford emphasized the importance of retaining the exceptional talent in the cannabis industry. She voiced concerns about the risk of a “brain drain” or a significant talent exodus. The industry has invested substantial resources in recruiting individuals from diverse backgrounds and training them to understand the intricacies of the cannabis field. Additionally, it has benefited from the cross-pollination of ideas and practices from other industries. Losing this talent to other sectors represents a significant concern, with these individuals potentially not returning.

Furthermore, the increased attrition rate is a noteworthy trend in the industry, particularly among hourly workers. This attrition level is currently at its highest, making the competition for hourly worker talent fierce, as many other industries are vying for the same pool of workers.

Bottom Line

In the evolving landscape of the cannabis industry, employers hold a newfound advantage, reshaping the labor market. While demand for hourly workers remains strong, non-revenue-generating roles face peril, sparking discussions about retaining talent, the emergence of hybrid workforces, and an eastward migration of industry professionals. The sector must navigate these shifts to secure its workforce and position in the ever-changing market. (Full Story)

In category:Labor
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