U.S. plant-touching cannabis businesses – such as cultivators, manufacturers and retailers – say the industry is heading in a better direction, even without the impending rescheduling of marijuana.
According to survey data from the recently released 2024 MJBiz Factbook, more than 48% of revenue-generating cannabis businesses expect the industry will perform “somewhat better” or “much better” over the next 12 months.
That number increases to 82% by adding survey respondents whose cannabis industry outlook is “about the same” for the coming year.
Only 19% of cannabis business operators expect things to get worse in the next 12 months.
2024 cannabis operators survey
The MJBizDaily cannabis business survey took place Feb. 13-March 15, before U.S. Attorney General Merrick Garland formally proposed moving marijuana from Schedule 1 to Schedule 3 of the Controlled Substances Act.
Of more than 600 qualified survey responses, 90% were from owners, founders or executives in plant-touching or ancillary cannabis businesses.
Almost 72% of the respondents operate in cultivation, distribution, manufacturing, processing or retail.
Respondents planning to launch new companies had even rosier opinions.
Prelaunch marijuana business operators – those with a detailed plan who are working toward a launch date – were the most optimistic, with 82% saying the industry would be better in the next 12 months.
What is your overall outlook for the cannabis industry over the next 12 months?
The outcome was similar for those early in the business-planning process, with 72% saying the industry would be better off through 2024.
Not surprisingly, operators of closed businesses – those no longer generating revenue – had the worst industry outlook, with only 35% saying things seemed to be going in a better direction.
Bob Groesbeck, co-CEO of Nevada-based multistate operator Planet 13 Holdings, understands how the industry changes people.
“You go in bright-eyed, bushy-tailed with high expectations not fully understanding how complex this business is,” Groesbeck told MJBizDaily.
“Once you open your doors, you realize there are many challenges, including layers of regulatory changes by different jurisdictions that need to be constantly navigated.
“This is not an industry for the timid.”
Cannabis ups and downs
Lo Friesen, founder and CEO of Heylo, a cannabis product manufacturer in Washington state, is celebrating seven years in business and has experienced the ups and downs in the industry.
“The first two years are a honeymoon phase of business, especially in cannabis. You can ride the ‘shiny-new-thing’ wave in those years, and things can feel easy,” Friesen said.
“The years that follow are where the real work begins.”
But are cannabis businesses more optimistic compared to other industries?
Chad Ricketts, director of retail for Colorado-based Native Roots Cannabis, believes so.
“Given how young it is and how quickly trends in cannabis change, there’s always a strong sense of potential and opportunity,” Ricketts said.
“I think most businesses that enter the space do not know what to expect out of the gate but do expect that, in the long run, things will end up going well as we head toward federal legalization.”
Challenges ahead
Until the industry sees tangible progress, Groesbeck is guardedly optimistic.
“Rescheduling is a good start, but that doesn’t solve the key issues we are facing right now, with the burdens of banking limitations and 280E taxation, Planet 13’s Groesbeck said.
“We need to see meaningful steps forward with SAFE Banking solutions and fair taxation laws to allow cannabis businesses to operate on a level playing field.”
Length of time in the industry can change operators’ business outlook, but so can their positions in the marijuana supply chain.
The various sectors, such as cultivation, manufacturing and retail, each have a different outlook.
The most optimistic were manufacturers and processors, 73% of whom thought the industry would improve over the next 12 months.
Sixty-seven percent of retailers surveyed said things will be better into 2025.
While they still have a positive outlook for the coming year, cultivators were the most pessimistic, with only 59% saying they expected the industry to improve.
Responses differ by sector
Ricketts of Native Roots explained that each cannabis sector is experiencing changes and varying levels of competition right now.
In mature markets such as Colorado, where Native Roots is based, the retail side is particularly competitive, making it tough for businesses to find a competitive edge and driving a constant need for innovation in customer experience and product offerings.
The same holds true for the cultivation sector, Ricketts said, though those operators face different challenges, including optimizing yields and managing environmental factors.
“I think that manufacturers may be the most optimistic,” Ricketts said, “because, while the retail and cultivation sectors feel more immediate competitive pressure, manufacturers see substantial growth opportunities as they develop new products and technologies.”
More information about the 2024 MJBiz Factbook, including how to subscribe, is available here.
Andrew Long can be reached at andrew.long@mjbizdaily.com.