Colorado cut 10,000 cannabis jobs in the past year, report says
The industry is losing its allure as a cannabis tourism destination.
This year, the cannabis industry has reached a turning point. The drop in sales since the pandemic peak and a pause on outside investment are driving this.
Vangst's new cannabis jobs report, which is based in Denver, describes the last year as "the big cannabis reset." Vangst releases a job report each year based on state sales revenue and cannabis employment. It also uses harvest reports, medical marijuana patients counts, private investment data, and harvest reports.
The 2023 report says that for the first time ever in the history legal cannabis, jobs have decreased in the industry. In February 2023, cannabis-related jobs in the United States totaled 417,493, down 2% compared to 428,059 people employed in February 2022.
The report says that "after nearly a decade without a break in double-digit growth, the cannabis sector collectively paused on new hiring by 2022." The report states that "America's regulated marijuana industry faced economic headwinds which tested the resilience of all companies in the cannabis sector."
Colorado saw the second largest drop in cannabis employment in the last year. The report says that as of February 10,481 jobs, or 28%, of those employed in the cannabis industry of Colorado were lost.
California, the state that suffered most with 12,600 job losses, was the only one to do so. Oklahoma, Oregon Nevada and Arizona all experienced job losses.
Part of the reductions were due to decreased sales in certain states. The Covid-19 pandemic saw nationwide sales increase by 20%. Cannabis companies increased their staff in 2020 and 2021 to meet the demand.
In 2022, as the pandemic subsided, cannabis sales returned to their pre-pandemic level. According to the report, Colorado saw the largest drop in sales post-pandemic of any state. In 2021, cannabis companies in Colorado sold $2.2 billion of cannabis and $1.8 in 2022.
The report says that many companies had staffing levels which were incompatible with a return to normalcy.
Vangst stated that Colorado lost revenue not just because the pandemic period ended. Vangst said that the company attributed a part of the decline in sales to the legalization of cannabis in more states.
The report says that consumers in nearby states such as New Mexico Arizona Nevada Oklahoma and Montana no longer have to travel to Colorado for regulated cannabis.
The report states that "as more states opened up legal stores, the Centennial State's allure as a destination for cannabis tourism diminished." Colorado's lost clients didn't stop buying legal cannabis. "They just stopped buying it in Colorado."
The report states that nearly all major cannabis brands have made staff reductions in the last six months. Vangst terminated nine staff members in November, citing a drop in demand for their cannabis-focused recruitment platform.
Karson Humiston, founder and CEO of Vangst, told the Denver Business Journal that it was "awful" to have to make such difficult decisions. "Hiring is our business and when customers don't hire, it negatively impacts us."
Cannabis companies that have survived in 2023 rely on their earned revenues alone. Investment capital has almost dried up.
Near the end of the year 2022, venture funding in most industries began to slow down. The country was experiencing an increase in lending rates and inflation. Vangst said that 2023 would mark the end of "the era cheap cash."
The report says that the cannabis industry is not "all doom and gloom". Vangst and Whitney Economics forecasted an improvement in hiring later in 2023.
Cannabis companies will be able to better predict their revenue this year. More mature markets like Colorado, Washington, and Oregon are likely to reach an "equilibrium" with consumers, on which they can rely.
The report states that "we don't anticipate these sales declines continuing."
Authors of the report said that the states with the greatest potential to increase cannabis jobs by 2023 were those who still had room for their cannabis market to mature. These states include California New York New Jersey Virginia Maryland Missouri Rhode Island Connecticut.