A recent survey by the National Cannabis Industry Association (NCIA) and Whitney Economics found that 37% of cannabis businesses in the U.S. are not profitable. Of the 396 cannabis businesses around the country that were surveyed, only 42% were found to be profitable while 21% felt their investments were breaking even, according to the survey results.
The NCIA survey highlights some specific challenges facing the industry, like competition from the illicit market and over-taxation. Additionally, lack of access to banking and price volatility were noted as potential stumbling blocks for cannabis entrepreneurs, the report says.
“I think we’re in the business where it’s the toughest and the profit is the hardest to get,” Mike Benziger, a California grower whose family has roots in the wine industry, told the North Bay Business Journal. “When we became an industry driven on price rather than quality, that’s when it became tough.”
Benziger told the Journal the cannabis business is “designed to take big hits,” adding that smaller growers need to “already have money” or be able to make sales “on-site” if they want to survive.
Beau Whitney, the founder of Whitney Economics, described the results as “no surprise.”
“The narrative out there is that everyone is swimming in cash because of cannabis,” he said. “But, for many, unless you have $2.5 (million) to $3 million, you’re not able to cover a loan or rent or health care.”
Get daily cannabis business news updates. Subscribe