Less than 25% of US cannabis operators profitable, study finds

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Only 24.4% of businesses in the U.S. cannabis sector report they are profitable, according to a new report by Oregon-based cannabis data and research company Whitney Economics, further underlining the industry’s struggles.

Last year’s Cannabis Operator Sentiment and Business Conditions survey report found that 42% of marijuana businesses were turning a profit, according to a news release.

A total of 224 respondents from 13 states participated in this year’s survey, representing 1.1% of licensees in those states, Whitney Economics founder Beau Whitney wrote in an email to MJBizDaily.

“By conducting this survey, Whitney Economics strives to bridge the gap between the theories of business economics and the daily lives of operators within the cannabis industry,” he said in a statement. 

Operators also said that:

  • Rising costs and falling wholesale cannabis prices are pressuring them to find creative solutions.
  • State regulations can make or break the chances of success in a legal cannabis market, and they haven’t kept up with changing market and business conditions.
  • Too many licenses are being issued. More than 70% of respondents favor limiting cannabis licenses.
  • Taxes remain too high.

The report forecasts the next seven quarters will have “slower-than-normal” growth because of the above factors, which aren’t expected to change any time soon.

The survey also gathered information about revenues, profits, margins, costs and materials.

Kate Robertson can be reached at kate.robertson@mjbizdaily.com