Is the US cannabis industry collapsing? – Cannabis | weed | marijuana

Is the US cannabis industry collapsing? A new report from Whitney Economics answers yes. As the Biden administration pushes ahead with cannabis rescheduling for the 2024 election, only 24% of U.S. cannabis companies are profitable.

Whitney Economics is a consulting and research firm that compiles economic data on cannabis into annual reports. They published their findings in their second annual Cannabis Operator Sentiment and Business Conditions.

US cannabis collapses

According to the survey report, the US cannabis industry appears to be collapsing. Only 24.4% of cannabis operators in the U.S. are profitable. That is 42% less than in the previous year.

Little to no access to banking, rising supply chain costs, and lower cannabis prices are all contributing to this collapse. The report anticipates at least seven quarters of below-average growth.

But is the US cannabis industry collapsing beyond repair? That depends on what condition you are in.

The report found that government regulators decide whether you succeed or fail. Rules and requirements that are too burdensome and capital intensive negatively impact cannabis companies.

The report highlights that markets and business conditions have changed, but regulators’ guidance has not.

However, instead of moving to freer markets, 70% of respondents would like regulators to cap licenses. Whilst this would reduce competition and thus make existing operators profitable, it would at the expense of consumer choice.

According to the report, cannabis is collapsing in the US because legislation and regulatory policies focus on generating tax revenue rather than creating a viable and sustainable cannabis industry.

“Operators continue to be impacted by taxes, tough regulations and lack of access to capital. Only a quarter (24.4%) of respondents reported profitable operations.”

Whitney Economics Q4’22 survey report on cannabis operator sentiment and business

3 ways to reverse the collapse of the US cannabis industry

How can we reverse the collapse of the US cannabis industry?

The Whitney Economics report cites taxes, regulations and a lack of capital as the top three obstacles negatively impacting the industry. While conventional wisdom suggests adjustments here and there, we recommend a more radical approach.

Because if a report said America’s dairy industry or the auto industry collapsed 42% in one year, the President would declare a national emergency on TV.

But cannabis? Grilling.

Fortunately, the solutions presented here would benefit all industries if implemented. Not just cannabis.

1. Taxes

Cut taxes across the board and gut entire categories. States impose an “excise tax” on cannabis. Another name for excise taxes is “sin tax” because that’s essentially the idea.

Some actions are morally wrong but legally permissible. Ergo, the government imposes an additional “excise tax”.

But this idea is incompatible with individual freedom. And who decides what is moral and what is immoral? We’re not talking about hiring assassins on the dark web. We’re talking about a harmless, non-toxic herb.

Millions use it for medicinal purposes. Almost everyone uses it for therapeutic purposes; Why else would you consume it?

Tax cuts would help all businesses, not just the collapsing U.S. cannabis industry. Also, lower taxes mean less money going into the treasury. And that’s always a good thing.

2. Regulatory Rules

A market economy without regulation is impossible. The question is: who regulates?

Entrepreneurs regulate each other by competing for consumers. Consumers regulate entrepreneurs by patronizing various competitors.

The only way to make a profit – without government privileges – is by exchanging goods and services with people.

But not every entrepreneur is honest. Some will cut corners at the expense of others. And there will inevitably be disputes. That is the argument for regulation.

But these big government regulatory bureaucracies are a 20th-century invention.

Before that, Western civilization relied on English common law. For centuries we have developed rules and regulations from actual cases and comparisons.

Politicians have not pre-emptively created new rules and then empowered expensive bureaucracies to enforce them.

In this way, regulations were procedurally and adapted to changes. A common law system complements free markets. A state-regulated market creates the conditions for the capture of regulations and thus ultimately for economic fascism.

3. Access to Capital

Would the US cannabis industry collapse if state regulators didn’t impose arbitrary requirements based on their definitions of “public health and safety”?

Possibly, but access to capital goes beyond the regulatory structure.

For over a century, the Federal Reserve has been dedicated to transferring capital from the middle class to the richest of the rich.

The Fed creates asset bubbles by manipulating the money supply and interest rates. This benefits the wealthy who have assets and hurts individuals on low and fixed incomes.

When the bubbles burst, as they did in 2008, the ensuing economic recession hits the middle and lower classes disproportionately. Meanwhile, the big banks (causing the problem) are getting a taxpayer-funded bailout.

Americans can put an end to this century-long scam by abolishing the Fed and legalizing private, competitive currencies. And thus reverse the collapse of the US cannabis industry.