At a glance, the cannabis industry might seem like a lucrative abyss of profits and success. Sadly, reality tells a different story.
About 58% of cannabis cultivators said they are unhappy with the current landscape of the cannabis market, describing their feelings as either “bad” or “terrible.”
These feelings are consistently coupled with a despondent outlook on the industry overall, with cultivators unsure on how to grapple with decreasing wholesale prices, regulations and supply issues.
The third edition of the U.S Cannabis Cultivator Survey from Wells Fargo surveyed data from 400 cannabis cultivators within eight states. Cultivators were asked how they feel about the current cannabis market, revealing a resounding sense of displeasure in reaction to an overly saturated market, distribution issues and lower prices of cannabis products.
Only 11% of cultivators stated they were happy with the current state of affairs.
The survey also analyzed responses by state, finding that cultivators out of California held the most grievances. About 66% of cultivators said their opinions on the cannabis market were either “bad” or “terrible.”
Most of this contempt seems to come from the ways in which wholesale prices of cannabis goods are consistently falling. California, which boasts one of the largest cannabis industries in the globe, reported a decline in sales during 2022, most likely due to the lower prices per pound.
In its entirety, data revealed price drops within the wholesale market contribute to unhappiness from cultivators. Fifty-nine percent of cultivators stated that their current prices per pound were under $750, which is significantly lower than the average price of $800 per pound.
With the number of states that are beginning to legalize cannabis recreationally, markets are initially met with a limited supply and a high demand. Over time, as cannabis cultivators establish new brands and products, all while the demand stays the same, profit margins are slim.
Another survey from Whitney Economics pointed to similar trends, finding that only 24.4% of cannabis businesses in the United States are profitable.
Regardless of an overarching theme of concerned distaste for the industry, only 19% of cultivators indicated they plan to leave the industry altogether. In 2022, this number looked a little different; with at least 22% of cultivators expressing their desire to call it quits.
It appears there are glimmers of resiliency within the pioneers of this industry. However, how this bleeds into profit margins of the industry begs a different question. About 42% of cultivators still plan on increasing cultivation over the next year, according to the survey. This, in theory, could amplify the oversupplied nature of the cannabis market that is already present.
Hopefully, one day cultivators can find a middle ground with consumers and the ever-changing nature of the cannabis market.
