It’s always greener on the other side, especially when that side is cannabis. Shrouded in mystique and misconceptions, legal weed is either glamorous or reviled; no profession has the allure, pitfalls, and potential to create wealth in ways that the burgeoning cannabis industry does. People who support legal cannabis range from individual budtenders to John Boehner, former Ohio Congressman and Speaker of the U.S. House of Representatives. The reality is different. Let’s take a look behind the curtain.
Cannabis by the Numbers:
22: U.S. states in which cannabis is fully legal, meaning it is decriminalized and legal for medicinal and recreational use.
22: U.S. states have “mixed” cannabis laws, meaning recreational is illegal and may include partial decriminalization and restrictive but legal medicinal industries. Details vary from state to state.
6: Number of U.S. states in which cannabis is fully illegal.
$24 billion: Annual legal marijuana sales in 2021.
$1-$3M: Range of annual revenues as reported by 20% of cannabis retail dispensaries. 15% had annual revenue of $500,000 - $1M, 13% had annual revenue of $10 million - $30 million, and 12% had annual revenue of $5 million - $10 million.
Cannabis is profitable where it is legal but still exists in a purgatory of legal, professional, and cultural acceptance. If you’re considering a career in the cannabis industry, the good news is that, even with its many restrictions, it’s one of the fastest-growing industries, and has many types of specialties (e.g., cultivation to retail sales). However, the legal cannabis industry is still in its infancy, so its opportunities are equally matched by its obstacles. Factors to consider:
1. Cannabis is still illegal. Sure, it may be fully legal in 22 states, but it’s illegal on a federal level and mostly illegal everywhere else. Not everybody is down with the wacky weed. When considering a job in the cannabis industry, it’s important to know that your professional reputation may suffer in resistant quarters, and this could result in less mobility in terms of job locations and opportunities. In the cannabis industry you would operate in an industry with a split legal-illegal personality; for example, the most glaring contradiction is that the cannabis industry can make tons of money, but business operators can’t put their money earned from cannibas in a bank. H.R. 1996 The SAFE Banking Act of 2021 has been stalled in Congress since April 2021. Surely there are many legislative battles yet to come before cannabis sheds its legal-illegal status for good.
2. The cannabis industry is balkanized. National legalization of marijuana will happen, but nobody can say when. Until then, the cannabis industry is a balkanized, uncertain, and ever-evolving landscape. Each state where cannabis is fully legal has its own rules, regulations, and culture. In some legal states, like California, recreational marijuana is legal statewide, but counties can choose for themselves whether they want to allow it so the internal legal-illegal status is further balkanized. The states with “mixed” laws are even more varied and complex. If you are thinking about starting a cannabis business, where you set up your business means a lot. If you are thinking about working in the cannabis industry, your employment options will be greater in fully legal states than in states that allow narrow medicinal use. Federal legalization will allow standardization, but it will be preceded by a tectonic shift in the players. Multi-state operators with experience and deep pockets will survive the post-national legalization shake-up while smaller businesses will be bought out or fold. From a strategic, long-term, career-oriented perspective, pursuing work for a multi-state operator, like Cresco Labs ($26 billion in annual revenue), is the most stable and potentially lucrative path in an uncertain industry.
3. Licenses are the cannabis industry’s currency. One of the greatest barriers to entry into the cannabis industry is the limited number of licenses to cultivate, process, transport, and sell marijuana. A license means two things – money and red tape. To operate in the legal market, you must have a license or series of licenses, and the gatekeepers to those licenses have overwhelming power over their region’s cannabis businesses. The licensing process may be expensive. If you’re an entrepreneur, the green gold rush is real. Vast fortunes are being made and will be made, but getting in on the ground floor is hyper-competitive and the first event is the battle for a license.
4. Taxes, taxes, and more taxes. Taxation can be brutal in the legal marijuana market. Everybody wants their cut – the state, the county, and the city just for starters. Stock analysts routinely cite high taxation as a major obstacle to profitability when rating cannabis stocks. Federal legalization will also mean federal taxation, so the outlook is that inflated taxation will only increase. For example, when California transitioned from medicinal to recreational marijuana in 2016, more than the storefronts changed. At the newly legal marijuana dispensaries, prices skyrocketed, high taxation being a primary factor. The illicit market didn’t subside, it got stronger. Now, the legal and illicit markets compete with one another and the illicit market still holds the majority of sales. If you’re thinking about a career in the cannabis industry, it needs tax attorneys and tax professionals with specialized knowledge of the unique legal-illegal quagmire cannabis operators face.
5. Once the cannabis money train leaves the station it’s not coming back. In the recent 2022 elections, Maryland and Missouri legalized recreational marijuana, but similar initiatives failed in Arkansas, North Dakota, and South Dakota. Maryland and Missouri will soon be addicted to the gonzo cannabis tax dollars that will soon be flowing into their coffers. Since 2014, states that allow adult legal recreational marijuana paid a combined 11.2 billion dollars in taxes (see above). While the journey to full national legalization progresses in small steps, the states that have legalized recreational marijuana reap an immediate enormous financial benefit. From a cannabis career perspective, Maryland and Missouri are the newest states you can add to potential places you can choose to work in the cannabis industry with confidence in your job security. We now know that the cannabis industry is also recession and pandemic-proof. Legal recreational cannabis sales increase every year and are projected to increase in the future. As a retail industry, individual cannabis brands can suffer from poor business decisions (e.g., expanding too fast), but the industry as a whole has foundational job stability. Despite the various obstacles, legal challenges, and barriers to entry, the cannabis industry is a money-making machine for everybody involved. Once it starts nobody is going to stop it.
6. Cannabis is a vast industry, but in the end, it’s sales and retail. The business-to-business operations of marijuana are a vast network of specialties like hydroponic supply stores, cultivation, processors, extractors, software-POS-hardware systems, and labs that test products for potency and purity – just to name a few. Cannabis’s many tenacles offer interesting job opportunities for highly specialized professionals. For example, genetics is important for brands and discriminating consumers. Brands need people who can create original and proprietary marijuana strains. That’s a thing. That’s a high-paying job. However, cannabis is primarily a sales and retail operation. If you work for a brand, your job is to sell to retailers. If you work for a retailer, your job is to sell to the consumer. That’s the business model, which is the same as every other retail operation. Sales mean people in their cars driving from retailer to retailer servicing existing accounts and getting the product into as many new dispensaries as possible. Retail means budtenders, managers, warehouse operations, logistics, and social media marketing.
7. A legal recreational marijuana market creates better, safer products. A heavily regulated industry must conform to many onerous state (and at some point, federal) laws, some of which are burdensome such as child-proof packaging, and others that dictate that growers and manufacturers of marijuana products must meet certain criteria to ensure legal compliance and consumer safety. That means an entire category of marijuana industry jobs related to compliance and safety.
8. Competition among cannabis brands is fierce, so marketing and innovation are needed. Even though there are a limited number of entities that can legally sell marijuana, it seems like there are an endless number of brands vying to gain the kind of name recognition like titans Coke, Pepsi, Nike, and Apple. Full national federal legalization will most likely lead to fewer brands, but the current landscape is very competitive and regional. Brands found on the east coast are different from ones on the west coast. As brands seek to gain market share in their area, they employ plant genetic specialists, product developers, and marketing teams to innovate and punch through the crowded field to get to the increasingly discriminating cannabis consumer.
The cannabis industry has its pitfalls and uncertainties but there is no question that it is lucrative and will only expand. However, the current state-by-state model will eventually be replaced by national legalization and nobody can say for sure how that will transform the current, limited industry. Regional multi-state-operator monopolies are likely, followed by mergers and acquisitions. From an investor and entrepreneur perspective, it’s a rocky road with risks, but the potential payoff is great. For people considering a career in the cannabis industry, there are many types of opportunities and the pool of places and roles from which to choose will only increase. The green gold rush is on and there is still plenty of time to get a ticket. And if you have legal questions, ALWAYS consult an attorney.
