NCIA SURVEY REPORTS OVER 1/3 OF CANNABIS BUSINESSES DO NOT PROFIT

A Survey recently conducted by the NCIA, and reported on by Northbay Business Journal and The State of Cannabis Newshour, which gathered information from 396 cannabis operators, concluded that business is a lot less profitable than reported.   Over one in three operators claims to be losing money in the fiscal year, with some state markets, like California, reporting more than 50% of operators losing money to keep their lights on and roughly one in five treading water and breaking even.  

The survey identified multiple factors contributing to the steep climb to profitability, including over-taxation, lack of banking access and investment capital, absence of interstate commerce and federal legalization, market saturation, price volatility, the existence of a robust illicit market and even paper printing costs.   CannaCraft was one of the parties surveyed, who acknowledged they printed over 4 million pages of documents just to meet compliance requirements.   

The survey also concluded that lab operators also struggle to achieve profitability, with nearly one in eight testing labs considering closing operations because of profitability concerns.   Market operators have coined a new term, “prohibition through legalization,” to identify how the legal pathway has, in some respects, caused damage to affordable access.   

Overall, the survey found the landscape is far less green than projected and seasoned operators are approaching their craft with guarded optimism in California while other new markets, with less onerous tax and operating requirements, emerge as more attractive places to operate a canna-brand.  

If you are considering markets to launch a cannabis operation in, consider consulting with Brandon Dorsky at Law Offices of Brandon Dorsky before making any expensive commitments.