Marijuana Business Factbook 2019

235 © Copyright 2020, Marijuana Business Daily , a division of Anne Holland Ventures Inc. You may NOT copy this Factbook, or make public the data and facts contained herein, in part or in whole. For more copies or editorial permissions, contact CustomerService@MJBizDaily.com or call (720) 213-5992, ext. 1. Financial & Operational Data: Retailers | Chapter 5 MJBIZDAILY.COM RETAIL SECTOR CHALLENGES CHART 5.08: Top Challenges For Cannabis Retailers Source: 2019 Marijuana Business Factbook Note: Multiple-choice question; respondent total may be greater than 100%. © 2019 Marijuana Business Daily, a division of Anne Holland Ventures Inc. All rights reserved. Top Challenges For Cannabis Retailers Taxation Licensed Competitors Federal Laws/Intervention Lack Of Banking Services Illicit-Market Competitors Managing Growth/Scalability Cost/Complexity Of Compliance Insufficient Number Of Vendors/Partners Disagreement On Direction Of Company Other Fundraising Finding Qualified Management/Staff 51% 49% 36% 33% 33% 31% 26% 10% 10% 5% 5% 3% Percent Of Businesses Taxation and competition from other licensed businesses are cited as the top challenges facing cannabis retailers. Although these are issues marijuana businesses in all sectors must deal with, as the following charts will show, the impacts are particularly pronounced for retailers. Businesses continue to struggle with IRS tax requirement 280E, which limits the deductions marijuana companies are allowed to take, putting them at a disadvantage relative to mainstream retail companies. Chart 5.09 further demonstrates the implications of 280E. Competition can be fierce in some markets, as shown in Chart 5.10. As markets become increasingly saturated, how much of the sales pie that is available to individual retailers continues to shrink. As the industry moves out of the period of hypergrowth, retailers must consider ways to improve their operations through reducing costs, providing exceptional service and filling niches that may have been overlooked by other competitors.