A lot of cannabis companies and operators are struggling right now. There has been a lot of discussion on social media platforms, like LinkedIn, about recent layoffs. What we’re seeing is many of the top U.S. cannabis operators and MSOs are cutting staff.
There are also single-state private companies in states like California and Michigan that are dealing with their own layoffs. Layoffs are occurring for a variety of reasons including, the drop in price of wholesale flower, over-taxation, challenges with raising capital, and the current state of the economy.
Despite the challenges leading to layoffs, there is still an undercurrent of growth in the cannabis industry. Existing markets are still developing and new states are launching adult-use and recreational programs. This will all lead to job creation. There will still be more people working in the legal cannabis industry – whether it be adult-use or medical – at the end of 2023 than at the beginning.
New York, Connecticut, and Missouri and launching adult-use programs and have sales for the first time.
Arizona and New Mexico are expanding their recreational programs and are nowhere close to mature status (so much opportunity for growth!).
Arkansas, Louisiana, and Florida are expanding access to medical cannabis.
Mississippi and Alabama medical cannabis sales may start to gain traction.
Michigan and California are already mature billion-dollar markets and, although slowly, are still expanding.
The entrepreneurial energy is high. The cannabis industry is moving forward in more sophisticated ways. And although some people are losing their jobs, the overall industry growth and amount of opportunity outweigh the layoffs.
Cannabis Industry Predictions 2023
1 Cultivation is still the #1 job creator in all of cannabis
With no interstate commerce, every market starts with happy plants in the ground. That means jobs. Cultivation management, staff-level workers, manufacturing, and industrial agriculture are all needed. More cultivation jobs will be added this year than any other cannabis vertical. Most of the people hired in a cultivation job will have never worked professionally in cannabis cultivation. There is a lot of training involved and opportunity for upward mobility for folks that get their foot in the door here.
2 There will still be a migration of talent
Last year, we predicted there would be a talent migration from the West Coast to the East Coast. In 2023, that is still a theme, but the locations of the jobs people are migrating to are different.
People will be migrating to:
- States launching or that recently launched their adult-use programs – like New York, New Jersey, Connecticut, and Rhode Island.
- States in the South that have medical programs taking off – like Arkansas, Louisiana, and Mississippi.
- Existing adult-use markets that are in expansion mode – like New Mexico and Missouri.
3 New York will be a game-changer
New York is a game changer. For the cannabis movement, it serves as a tentpole and a marker of change and shifting currents. NYC is the largest legal cannabis city on the planet.
The rollout of New York’s adult-use program has been much slower than many people hoped for. We’re all still trying to completely understand the legacy and medical operator’s place in the adult-use market.
All of the retailers that open up in New York are going to see massive numbers, massive revenue, and massive demand. And since New York’s medical industry was so limited, the whole NY industry needs to scale to support the demand.
The required ownership structure for New York license holders is going to mean that people that have never run cannabis businesses before are going to be taking their passion, their legacy, and their entrepreneurial skills and applying it to this industry in New York.
4 More innovative social equity programs
So far there have been great intentions for social equity but not a lot of great results. There has been little success getting those personally disadvantaged, or from communities that have been harmed by the War on Drugs, to participate in the regulated cannabis industry in any way.
The industry has come to an understanding that lack of access to capital is as big of a problem as lack of ability to get a license. States are going to be tackling this dilemma in different ways.
New structures, access to capital, and businesses that are “social equity” licenses in states like New York, New Jersey, Illinois, and Massachusetts are all going to go live this year.
It’s been challenging for social equity programs to get it right. But this next wave of legal states – especially on the East Coast – are doubling down on their efforts to find solutions to make sure there’s participation in the legal market from impacted groups.
5 More recruiting of candidates with cannabis industry experience
When FlowerHire started recruiting for cannabis five years ago, most people weren’t hiring people that worked professionally in cannabis. Today, the industry employs well over 400,000 people and it’s still climbing. There are a lot of people that have come into the space from other industries over the past five years. Many of these employees are being affected by the downsizing of companies, but they will want to stay in the industry if they can find a job.
People with cannabis experience can apply their skills to new and merging operators. These new companies have an opportunity that many experienced cannabis companies didn’t have… Emerging cannabis companies have the opportunity to hire qualified and experienced employees. New cannabis companies can grow quickly because they have employees that have actually grown cannabis companies before. These companies will more quickly achieve revenue and profitability.
6 Cannabis is still a force for upward mobility
There’s a lot of complexity to honoring the legacy of criminalization of the plant. Those who are part of the legacy, non-regulated industry and have been operating businesses for many years deserve access to a slice of the wealth created by this industry. However, winning a cannabis license isn’t the only way the industry can repair the damage done by the War on Drugs. People can also find a path forward by getting a job that they are excited about, learning new skills, and working up the chain. There are so many stories of legacy industry members who got a legal cannabis job and have become leaders in their areas of expertise. People have the opportunity to believe in the work they’re doing and build their own unique path toward success.
Check out these Talent in Cannabis Profiles:
7 Rise of “glue” positions
At FlowerHire, we refer to “glue” positions as roles that help cannabis companies operate with more predictability. Glue positions connect the make side (the side of the business that creates products) and revenue side (the part of the company that sells the products). Those two sides often finger-point at each other as responsible when goals are not met. Glue positions bring the two sides together and offer data-driven decision-making and fact-based communication to help the entire company work together and more efficiently hit goals.
As cannabis companies mature, they get to the position of hiring for roles like cost accounting, inventory management, financial planning, analytics, and IT. These types of roles help a business run with more predictable revenues and costs so they can forecast and track business performance according to specific milestones. They provide data-driven insights for consumer spending to drive customer retention and loyalty.
8 Compensation is more on par with other industries.
In the past, we saw many cannabis companies pay above-market prices to attract top talent because of the lack of comparable benefits and the stigma associated with working in cannabis. Today, that’s not the case. The stigma has been greatly reduced and is even non-existent in some places. Additionally, many cannabis companies now offer benefits that are comparable to other industries.
9 Improved human capital solutions
HR and human capital solutions have improved dramatically in the last three years. In 2020, if you were starting a cannabis business, there would only be a certain number of vendors you could work with, for things like payroll and HR. No longer do cannabis companies have to pay a premium for HR services just for being in cannabis.
There are many more choices for cannabis companies that are establishing the foundation of their HR department and their human capital function. There are more tech options and lower-cost solutions available to the industry than ever before. Companies can streamline their costs – without reducing their workforce – and find better providers and get lower rates than ever before.
10 The HR maturity in maturing markets will increase.
A maturing market – like Colorado and California – is a market where you’ll see sales increase by about 10 or 15 percent. In a maturing market, a company’s competitive advantage is its people – its talent. Of course, a competitive advantage can be something like a marquee location or the brand… But the reality is that it’s the people who are developing the strategy and making those branding and location choices.
As markets mature, companies will focus more on instituting more human capital practices. For example, in performance management – companies will tie performance into goals and value for the organization. Companies will implement strategies to improve cannabis employee retention of high performers to prevent them from leaving with the competition.
HR practices will be put into place within established operators that we haven’t quite seen at scale in cannabis before.
The whole world is going through an economic reset. And as an emerging industry, that’s dealing with unprecedented taxation and regulatory hurdles, there are challenges. And there’s a long way to go before every adult in the United States has access to safer forms of recreational and plant-based medicine. As we continue moving towards access to plant medicine, more jobs will consequently be created. Because of that, we remain very optimistic and bullish long-term about the career opportunities in cannabis.