Cannabis operators are more optimistic about 2023 than traditional business operators
By Kaitlin Domangue
Vangst released a new report analyzing the impact of a potential economic downturn on cannabis businesses.
As a whole, cannabis business owners are more optimistic about how they might perform in a recession than traditional business leaders.
While this does indicate the tenacity of cannabis operators, I do have to wonder how realistic these predictions are. Optimistic? Certainly. Realistic… TBD.
Nonetheless, some of their optimism isn’t unfounded.
Cannabis businesses performed unexpectedly well during stay-at-home orders at the pandemic’s precipice, in part because cannabis businesses were one of the few operations deemed essential business but also because people utilized cannabis to manage the anxiety and stress of dealing with the lockdown.
“The product is still selling. It is an essential. People take their cannabis seriously. Not only on the medicinal side, but recreationally as well,” Katrina Rosseini, a strategic consultant in the cannabis space, told ABC 10.
“A lot of people who are using it recreationally are using it to relax. This pandemic is uncharted waters. We don’t know what to expect tomorrow. People are using it for insomnia or to deal with anxiety.”
Cannabis operators have a more favorable outlook on capital spending, employment, and more
Here are the stats from Vangst operators and predictions for cannabis business performance over the next year. Vangst data from their 2022 Salary Guide to determine these results:
- 69.4% of respondents expect an increase in sales over the next year, compared to 65% of traditional business owners
- 67.3% of cannabis business operators say they plan to increase employment over the next year, compared to just 47% of mainstream business operators saying the same
- 76.2% of respondents believe that conditions in the cannabis economy are worse than they were a year ago, compared to 8.3% who say they are better than a year ago
- 73% of respondents say economic conditions for the overall U.S. economy are worse than they were a year ago
One interesting note is the discrepancy between cannabis businesses and mainstream businesses in their predictions for capital spending over the next year.
Just 43% of traditional businesses expect to increase their capital spending next year, compared to 58.5% of cannabis businesses.
Hopefully, this indicates that cannabis businesses will receive a much-needed cash injection and are adequately prepared to brace potentially troubling economic waters in the U.S. economy over the next few years.
Another round of layoffs hit cannabis
Arizona-based, vertically-integrated cannabis operator, Item 9 Labs is slashing its staff by 20%.
All cannabis layoffs are detrimental, but large companies like Leafly and Weedmaps that have seen a few rounds of releases this year have a bit more cushion regarding employees.
Item 9 Labs employed 103 full-time employees and two part-time employees as of January of this year. Reducing staff by 20% is quite a cut for a small company like this.
The company attributes the layoff as part of an “effort to streamline operations in its path to profitability,” which “reduces many redundancies and better positions the company to become profitable while maintaining scalability.”
Item 9 Labs is currently in the process of acquiring Sessions Cannabis, one of Canada’s largest cannabis franchise companies.
“We believe the Sessions acquisition has the potential to be a game changer for Item 9 Labs Corp,” said Mike Weinberger, Item 9’s new CEO, recently promoted from Chief Franchise Officer.
“Not only does it significantly increase our retail footprint and bring us into a new country, but we will be able to continue rapidly growing our store count because we now have the right people in the right seats.”
Will cannabis layoffs bleed into 2023?
Cannabis layoffs are scary and heartbreaking. According to Vangst’s report, cannabis business operators are optimistic about hiring in 2023.
Let’s hope it sticks. Several cannabis companies have made significant cuts to their team in 2022, including –
And several more. Here’s to 2023 and a (hopefully) better year for U.S. cannabis businesses.