"From Setbacks to Comebacks: The Cannabis Industry's Employment Landscape" Karson Humiston discusses the annual jobs report for 2024, revealing a significant rebound in the cannabis industry with the addition of almost 23,000 new jobs. She, Bruce Barcott and Beau Whitney explore state-specific trends, the resilience of the market despite economic challenges, and make predictions for future job growth, particularly in states like Ohio, New York, New Jersey, and Maryland.
State of Cannabis Employment: A Deep Dive into the 2024 Jobs Report
Karson Humiston discuss the release of the Vangst annual cannabis industry 2024 jobs report with Bruce Barcott, a seasoned writer in the cannabis space, and Beau Whitney, the chief economist at Whitney Economics. The trio share insights into the current state of cannabis employment.
They begin with a sense of optimism as they reveal that the industry has bounced back from a challenging period, adding almost 23,000 new jobs, bringing the total to 440,145 full-time equivalent positions as of early 2024. This marks a 5% year-over-year increase, driven by a national revenue increase of about 10%. However, they note that not all states have experienced growth, with some leading the way in job opportunities.
Michigan, Missouri, and New Jersey are highlighted as the top three states for job additions, with Michigan adding over 11,000 jobs. Karson discusses the factors contributing to Michigan's growth, including lower product prices, increased legal market participation, and cannabis tourism from neighboring states like Ohio.
Conversely, the episode also addresses the job losses in established markets such as California, Colorado, and Washington, attributing the decline to various challenges including profitability issues, oversupply, and changes in consumer behavior. The conversation touches on the need for state regulators to adapt their policies to support the health of cannabis businesses, not just focus on public safety.
Looking ahead to 2024, the Karson predicts job growth in Ohio, New York, New Jersey, and Maryland, driven by new licenses and market maturation. They express concern for mature markets like Colorado, where businesses are struggling, and emphasize the importance of federal and state-level reforms to ensure the industry's sustainability.
The episode concludes with their predictions for the 2025 jobs report, expressing optimism for continued growth, especially with potential federal reforms and international developments like Germany's move towards legalization. They encourage listeners to download and share the report to raise awareness of the job creation potential of the cannabis industry.
Listeners can download the full 2024 jobs report at Vangst.com and use it to advocate for the cannabis industry's job creation potential. We encourage sharing the report with friends, employees, and politicians to support the industry's growth toward the goal of one million U.S. jobs. https://www.vangst.com/2024-jobs-report
00:00:00 - Introduction and Annual Jobs Report Release
00:00:49 - Positive Growth in Cannabis Jobs
00:02:20 - Significant Job Increases in Specific States
00:04:47 - Michigan's Surprising Job Growth
00:05:46 - Factors Contributing to Michigan's Job Increase
00:06:41 - Predictions for Job Growth in Ohio
00:07:20 - Potential Impact of Ohio's Market on Michigan
00:08:28 - States Expected to Add Jobs in 2024
00:10:43 - Maryland's License Increase and Job Growth
00:11:33 - States That Lost Jobs in 2023
00:12:36 - California's Job Loss and Industry Struggles
00:13:47 - Economic Challenges in the Cannabis Industry
00:15:54 - Delinquent Payments in the Cannabis Industry
00:16:05 - Comparing Bad Debt Ratios
00:17:30 - The Decline of Colorado's Cannabis Job Market
00:18:28 - Future Predictions for Cannabis Job Growth
00:19:44 - The Role of Regulators in Market Maturation
00:21:13 - Right-Sizing License Structures
00:23:09 - 2025 Job Growth Predictions
00:24:40 - Potential Impact of New Markets
00:25:16 - International Developments in Cannabis Reform
00:26:07 - Global Cannabis Market Influence
00:27:27 - Optimism for the Cannabis Industry's Future
00:28:38 - Importance of the Annual Jobs Report
00:29:10 - Advocacy and Political Engagement
Karson Humiston: and welcome back to another episode of the Proud to Work in Cannabis podcast. Really excited because today we dropped our annual jobs report. It's our 2024 edition. And joined with me today, I have longtime writer in the cannabis space, Bruce Barcott. We've been working with Bruce for a really long time. And we also have Bo Whitney, who's the chief economist at Whitney Economics. The three of us have been working together since we did the job report last year. And so, guys, great to be with you this morning. How are you both doing?
Bruce Barcott: Doing great.
Bo Whitney: It's great to be here. Thank you for having us.
Bruce Barcott: Yeah, thank you. It's good to be here and good to be reporting some actual good news in the cannabis space after a couple of rough years.
Karson Humiston: Yeah, after a couple rough years, we do have some good news to share with you in our jobs report. We see positive growth returning. So Bruce, do you want to give us the high level, the mic drop of what we found this year in the jobs report?
Bruce Barcott: Sure, last year we had, it was rough times, a lot of companies had layoffs, I'm sorry, in 2022 I'm talking about, and we saw a drop of about 10,000 jobs in the cannabis space for the first time ever. And this year, looking back at 2023 and early 2024, we found that the cannabis industry nationwide actually gained almost 23,000 new jobs. Legal cannabis now supports 440,000 per 145 full-time equivalent jobs. That's as of early 2024. That total represents a little more than a 5% year-over-year increase in jobs, and that's the result of a national revenue increase of about 10%. So, all in all, good news is a lot of deeper questions we'll get into there. It's not great news for every state, but a number of states are leading the way in terms of our job opportunities right now.
Karson Humiston: And, you know, one of the things I always think about is that when we started banks, there was less than 50,000 full-time jobs. And so today, for there to be 440,000 full-time U.S. jobs. Of course, we all want it to be going faster, but to add 23,000 new jobs, especially when the market is so hard and there's so many regulatory headwinds and just headwinds in general to be adding jobs, I was really excited about it. Bo, as you, as our data guy, as you were going through this, going through this report and putting it together, what surprised you most, just at a macro level before we get into some of the nitty-gritty on what happened on each state level?
Bo Whitney: Well, what I saw is that the market is extremely resilient. I mean, there were a lot of headwinds post-COVID. There was economic changes, there were higher interest rates making your financial costs higher. There was a change in consumer behavior due to inflation, so they weren't spending quite as much at the register. And so despite all these headwinds, there was an extremely resilient industry. And although there's kind of the tale of two or the tale of three markets, um, a lot of that growth came in those markets where they had already established their, their market and we're just growing it, or we're just introducing cannabis to the adult use population.
Karson Humiston: When we think about the states that added the most jobs, just to give some folks some perspective here, so the state that added the most jobs was Michigan. Michigan added 11,341 jobs, bringing their total jobs up to 46,746. The second state that added the most jobs was Missouri, adding over 10,000 jobs. And the third state that added the most jobs was New Jersey, adding over 4,000 new jobs. What is your take on that, the Michigan, Missouri, New Jersey? I think Missouri and New Jersey totally made sense to me, but Michigan has been a market that has been growing for a while, and jobs have been growing for a while, so I'm really curious on your read on the top three.
Bruce Barcott: Let me jump in here and give a shout out to Michigan. We have watched Michigan grow just year over year in surprising ways. It's incredible. And also, you know, we lost a real pioneer this week. John Sinclair passed away and he was a stalwart Michigander. And one of the reasons we have legal cannabis today, and to look back over the years and see that John was famously jailed in the early 70s for one joint, and now to have 46,000 jobs tied to legal cannabis in the state of Michigan is incredible. Bo, can you speak a little bit about the reasons for that? I mean, we saw legalization across the border in Ohio, and I'm sure there were a few people visiting from across the way into Michigan, but I'll let you take it a little bit from there.
Bo Whitney: Yeah, you know, a lot of the job creation comes from the fact that there's licenses, there's a lot of businesses associated with this. And there's also been a pretty significant decrease in price. And as a result, consumers are extremely price sensitive. As a result of that decline in price, more and more people are participating legally in the legal market. In addition to that, you've got some folks coming from other states that are purchasing in Michigan, and Ohio is one of them. And so you've got this pan of tourism going on. you've got lower prices with more legal participation and so that's the recipe for increased business. And when you have increased business, you have to have more employees in order to support that business. So that's one of the key drivers in all that.
Karson Humiston: So one thought on that, and I want to talk about some of the states that we think are going to add a lot of jobs in 2024 before we get into some of the states that didn't add jobs. So one of the states that we think is going to add a lot of jobs is Ohio. And so one of my questions, as you were saying, the can of tourism, is that do you suspect as places like Ohio and the Michigan bordering areas begin to open up that we'll see a decline in sales in Michigan and as a result a decline in jobs? Or what's your take on that on the can of tourism front with just the neighboring states like Ohio coming online?
Bo Whitney: Well, what you traditionally see in all that is that there is cannibalization of demand in the newly deploying states. And so that's good for the states like Ohio, right? And they already have an established medical program. It's very, very robust. And so by adding to that with the adult use population, you're going to need more businesses, more jobs and the like. It will have a suppressive effect on the demand in Michigan. Now, this is common when you saw the deployments in Arizona, New Mexico, you saw a sharp decline in the demand in Colorado. So, while there may be some employment softness, It's not the end of the world, it's more the normalization. And so you may not see explosive exponential growth, but a normalization of the growth. And in that scenario, it's just kind of steady eddy. So I don't look to see a dramatic decline in employment, but more of a softening of the growth rates.
Karson Humiston: So as we're looking forward to 2024, we think that there's going to be four states where we're going to see the most increase in hiring. We just talked about Ohio, but we also expect that to happen in New York, New Jersey, and Maryland. Bruce, do you want to talk about why we believe this is going to happen in these four states? So again, folks, Ohio, New York, New Jersey, and Maryland, this is where we see jobs coming in 2024.
Bruce Barcott: Yeah, well, Ohio's the most obvious one with, you know, Ohio's got 12 million residents, and it's, we, Bo has calculated that it's the seventh largest market in terms of its total potential market there in Ohio. It may capture a little bit, it may take a little time to capture that market, but Ohio's got a pretty strong medical marijuana infrastructure already. They've got 120 currently operating medical dispensaries, and those dispensaries will get the first licenses for adult use customers. So they're already, a number of them are already hiring additional staff to prepare for the opening. And I think more stores will be licensed in 2025, and they expect to open up to about 200 more stores in the next two or three years. Now, New York and New Jersey, I think we're looking for a little more moderate, steady growth there. New York has been famously slow in its rollout. The governor has recently sort of lit a fire under the cannabis agency there and said, you know, let's get going on these licenses and get some stores open here because they're still being swamped by unlicensed smoke shops, especially in New York City. New Jersey there, they expect, this is the regulatory commission there, they expect to go over a billion dollars in annual sales in 2024, and that's about a 30 percent revenue growth. So that, you know, I think we'll see that revenue growth drive the addition of a number of new jobs. And Bo, do you want to speak to those two states of Maryland?
Bo Whitney: Yeah, well, a lot of this is a function of more licenses. And Maryland just announced that they were increasing the number of licenses that they're going to deploy. And so if you have, you know, 10 or 12, 15 employees per license, like in some states, then it's going to grow pretty significantly. So really good opportunities. And at the same time, These are relatively nascent markets. And well, with the exception of New York, they're kind of a special case. But in these nascent markets, it takes a little while for cannabis to be normalized in society. And then once it is, then you've got a greater comfort level of going into the retail outlets and purchasing cannabis legally.
Karson Humiston: Let's switch gears a little bit and talk about some of the states that unfortunately lost jobs in you know, in 2023 and why. So we had California, they lost 4,975 jobs. Colorado lost 4,472. And Washington lost 3,305. And then some other states that also lost jobs, we saw Oklahoma, Oregon, Nevada, Massachusetts, and Arizona. These were states that, you know, there's less jobs at the end of the year than there were at the beginning. Guys, what do we think about this? There's some patterns that we're certainly starting to see, and it's no surprise as somebody that's in the hiring business, seeing customers just close down in places like California, shut their doors altogether, and of course get down to skeleton crews. But let's talk about why we think we saw jobs going away in these states.
Bruce Barcott: Yeah, you could do a whole podcast on California and its struggles year after year. I found Colorado's job loss to be really interesting and surprising. It seems like a combination of a couple of things happening in Colorado. One, as Bo mentioned earlier, As the loss of Canada tourism, now that buying in a legal store is no longer such an amazing experience that few people can have the opportunity to enjoy, I think that Colorado has lost a little of that shine from its cannabis tourism and the fact that New Mexico its neighbor to the south is not only legal, but has a really robust adult use system and stores and everything. I think they lost a lot of traffic there. And then the second part of that is that, you know, the price of an ounce in Colorado has fallen 30% in the last two to three years, and that squeezes everybody's profit margin. Beau, you want to add a little on top of that? You've gone deeper into the numbers there on those states.
Bo Whitney: Yeah, you know, a lot of this comes down to profitability and cannabis businesses have been struggling. And at the same time they've been struggling, there's been a payment issue, like a delinquent accounts receivable issue. And we just published a report on this. There's $3.8 billion in delinquent payments outstanding. And so that's pretty significant. That's almost two months worth of total revenue in the entire legal market. So in that regards, you're not profitable, or if you are, it's challenging. And then you have this payment issue. At the same time, like in the case of California, it's extremely tough to grow that market because so many of the counties still have prohibitions in place. So they've kind of opted out, which is opting in to the illicit market. So in that sense, you don't have the growth You have the profitability issues. You also have supply issues, oversupply and declining prices. And at the same time, you have the change in consumer behavior and higher input costs. And so your labor is going up. Your power is going up. And so you have all these margin squeezes. So when there's a margin squeeze like that, meaning, you know, greater costs, lower revenue, then you have to make some tough choices. And unfortunately, that's resulted in some layoffs, some firm closures, and people getting out of the market. And just to add to that, it's unfortunate when people do go out of business, because As a result of the federal illegality, there's really no protection. There's no bankruptcy protection or anything like that. So when cannabis businesses go under, go out of business, then it can have a devastating effect on them from a personal wealth destruction perspective. So it's even more devastating than just in typical industries in that regard.
Karson Humiston: You know, I was reading your report on the delinquent payments, and I was thinking about it. When you looked at sales to the amount of delinquent payments, it's something like 15%. roughly, and I was just Googling just to see, in America, what's the average bad debt to sales ratio? And it was less than a quarter point. It was like 0.16 or something. And so if a business had 15% bad debt, they would just go out of business. So it was just really staggering, your report around the delinquency. So I would definitely encourage everyone to take a look at it. I mean, it was really quite disturbing. Colorado, Bruce, back to what you were talking about, We used to throw a career fair in Colorado banks, and it used to sell out instantly, right? Companies would come, they'd set up a booth, and they would be fighting over who was going to be the platinum sponsor. Would it be LiveWell or Native Roots? And they would have huge tents, they'd have five internal managers. people that wanted these jobs would be lining up around the block. And so, anyway, it was always a great event. And we thought to ourselves last year, that event was always so fun. We, you know, had live music. We brought the community together. Let's do it again. We couldn't sell one booth, so we had to cancel it. But, you know, for a minute I was like, what's wrong with our sales team? Why can't we sell a booth? And, you know, now it's pretty obvious why there was jobs were going away and not coming up. And so, obviously, for our career fairs we need to be going to New markets, but it was just like an actual visual of the difference in. We did these fairs in 17, 18, 19, virtually in 20, and now we tried again last year and it was just impossible. So what I'm wondering is, and again, we're now thinking into the future, what happens in places like where I'm sitting right now? Colorado because everyone I speak to here it's like they basically tell me that they're just holding on for dear life and they don't know that They're going to be able to make it and they're not hiring if anything that they're asking us to help their employees find other jobs I'm just curious like what has to happen to make this work because it kind of is concerning when you look into Other states, I think about a place like California. We spent so much time winning customers, placing people in jobs, and then you see year over year those jobs and businesses going away. Are we going to be sitting here having this conversation about Ohio in five years? So I just want to get your reads on what happens in these markets and how other markets avoid it.
Bruce Barcott: Let me set you up here, Bo. Bo has some really interesting thoughts and observations on the role of regulators at this point in the maturation of cannabis markets and the idea that it may be time for them to start doing a little bit more than ID checks at the door. Bo?
Bo Whitney: Yeah, what I've found is that while the markets evolved and the type of businesses have had to be very malleable through this very dynamic period pre-COVID, COVID, post-COVID, they've learned to adapt to the changes of environment. And that's kind of the stereotypical nature of the industry as a whole. What the regulators have done, though, is that they've remained so transfixed on on public safety, which is justified, but they haven't been monitoring the health of their licensees. And as a result, their policies have remained static while the market has changed pretty dramatically over the last five years. And as a result, they're too strict and they're not pro-business. And if they would look at the health and the balance of the health of the operators, In addition to public safety, they would provide a greater. More open market so that they could thrive. A lot of the policies. Actually are increasing costs rather than decreasing them. And it's just, it's really negatively impacting. The industry, so while. There's a lot of talk about federal policy, banking, interstate commerce, tax reform, and the like. There's also things that could be done, very simple things, at the state level as well, such as like on this delinquent payment issue. I mean, they could mandate a certain time period in which people have to clear their books or clear their accounts. In some states like Washington, they're already doing this. In other states, they're entertaining this from a legislative and from a regulatory perspective. But there needs to be something fundamentally changed right now because there may not be the same industry in five years. And a lot of the folks that are just hanging on now are kind of counting on federal reform But they really need immediate state by state reform as well.
Bruce Barcott: And not to get one of the things Carson that we're also learning. Yep.
Karson Humiston: No, take it.
Bruce Barcott: We're also learning is to. Keep a closer watch on the balance between supply and demand, and that goes back to the issuance of licenses. Essentially, you're making a better balance between your growers and your retailers. You can grow as much as you want, but if there aren't those access points, there aren't those stores available for consumers to purchase, you're going to have an oversupply that drives prices down and drives folks out of business. So I think especially, you know, when you're talking about states like Ohio and also, you know, Minnesota coming online in the next couple of years, and Virginia eventually, hopefully, really, I think now's the time to take a hard look at the experience of other states and really, really, really watch what we're doing with roll licenses in those new states.
Bo Whitney: Yeah, you know, I've I've been helping some state regulators regulators to right size their license structure. And so we've been going in doing an analysis of their market, the amount of supply, the capacity, the capacity utilization. that's on the supply side, then looking at the demand, and then right-sizing the number of retailers, right-sizing the number of cultivators, right-sizing the number of processing licenses. And by doing so, it strikes a balance so that the operators are set up for success rather than becoming oversupplied and then economically constrained. So the right-sizing exercises starting to take shape now, but not all states are doing it. Just very few are right now, but we're hoping that we can support more states in this process.
Karson Humiston: Well, we're coming up on time here, so the final question I'll ask, I'm sure we'll be together between now and when we publish our 2025 jobs report, but What's your personal prediction? We're sitting here and we're talking about 2025. Do we have a 10% job increase? Do we have a minus 5% job increase? Let's throw them out there and we'll make this an annual bet. So.
Bruce Barcott: Well, what do you got?
Karson Humiston: What do you got, Bo?
Bo Whitney: Well, I think that there'll be an increase in demand for labor for sure. You can't help but have an increase because the market is forecast to grow. We're forecasting pretty significant growth. maybe not necessarily just this year, but in 2025 and 2026 when market conditions are more favorable, lower interest rates, greater macroeconomic type of things that are impacting the broader economy, but also are very, very correlated to the success in the cannabis market. So we're seeing predictions on increased employment, increased revenues, and a lot of this is coming in these new markets. So there's a lot of optimism, and we're pretty bullish right now on the cannabis industry as a whole and the adult use of medical markets and specifics.
Karson Humiston: Bruce, what do you think?
Bruce Barcott: Let's go, Ohio. Let's go, Ohio, is what I think. And just a peek around the corner, Minnesota is coming online soon, and they will need nearly 400 new stores. I'm looking at Virginia and hoping they can figure things out eventually. It's legal there, but the governor just vetoed a package that would open some stores. They'll be kicking it down the road, but Ohio's got our hopes high, and we're looking at Minnesota coming online after that. So, very exciting times.
Bo Whitney: You know, and one thing to note is, the Supreme Court in Florida just approved the adult use legalization to go on the ballot. And don't underestimate the impact of that, because if in Florida the voters have to approve it by a 60% support, and if they can get to that, it not only has a fundamental change in the way that the Floridian market works, but it could also have sweeping impacts on the southern states in terms of their reform movements as well. So there's little Well, Ohio, I totally agree. Minnesota, there's also stuff going on in the South that could raise a lot of eyebrows in a very positive way for future opportunities in the cannabis space.
Karson Humiston: And also from where I'm sitting, I'm optimistic. I'm very optimistic on the state front. Even from where we are, we're seeing a big increase in demand in New Jersey and New York right now. A lot of jobs are there and available. But I'm also looking forward to something that you talked about, Bo, just around the overall profitability of companies, including in more mature markets. We could see something on the federal level like rescheduling and people could get some relief on 280E to allow some cash flow to come into their business. I think that could be optimistic for companies in the more mature markets like the Colorado's. So I'm really optimistic about The new markets, and I think that's almost a guarantee, right? Ohio has to create jobs. There's businesses that go from zero to one. Of course you need employees. So I'm optimistic there, but I'm also cautiously optimistic on what will happen with something at the federal level to bring some cash flow back into businesses in more mature markets. So my bet is that we're sitting here with an at least a 10% year-over-year job growth as we're doing the 2025 jobs report. Let's hope that we're right. And I think that, you know, I don't think we were this optimistic last year. I think if we went back and we listened to our podcast last year, the three of us were a little down in the dumps, a little bit concerned. So I definitely think that we're turning the corner here.
Bo Whitney: Well, you only had anemic growth last year and a lot of the businesses and deployment of businesses was impacted by the higher interest rates and the higher cost of capital. And so I think we've turned that corner. And so people are talking more about interest rate cuts or so than interest rate increases. And so that can only be favorable for the cannabis industry. So I think we have turned a corner and there's reason for optimism throughout the country. Oh, and another thing is that there's reason for optimism internationally as well. I mean, Germany just announced their adult use legalization. It's a slow deployment, but that too could have a sweeping impact on the way cannabis reform is viewed internationally. And Germany could have taken the leadership mantle away from the United States and driving this reform globally. So something to look out for and closely watch. It's a global marketplace, and so issues internationally can impact the domestic market here in the United States.
Karson Humiston: Absolutely. Well, as always, it's such a pleasure to collaborate with you guys on this. I mean, it's for viewers listening, you might not notice the federal government does not count. cannabis jobs. And so, legitimately, Bo and Bruce have to, and Vance, have to go out and do it. So, without us doing this, nobody would be doing it. So, feeling really proud that we're the ones doing it. It's an incredibly important piece of work. Today, on Wednesday, I'm going to meet, I'm in D.C., and I'm going to meet with members of Congress. I have the jobs report printed out, and everybody that we meet with, I'm going to sit down and show them exactly what's going on with their state. We actually got Cannabis design stress balls because you can only do a leave behind that cost five dollars or less and on the stress ball. We said you know 440,000 US American jobs on a cannabis leaf that will leave behind for each of the politicians with a a cannabis stress ball. So again, uh, incredible piece of work. So proud to do it with you guys. And, uh, people can go to banks.com, download the report, share with your friends, share with your employees, share with your state and local politicians, share it with everybody. This industry creates jobs. It's going to create more jobs and we need everyone's support in helping us get to the million jobs in the U S a mark. So thank you guys so much.
Bo Whitney: Yeah. Thanks.
Bruce Barcott: All right. Thanks, Carson. Always fun to work with you.