More and more people are using cannabis, but profits have fallen – what’s going on?

Legalizing marijuana should be the dream not only of consumers – but of every entrepreneur who would mint the industry! Early risers made mini fortunes, but now you’re hearing about the corporate struggle – what’s up?

First, more and more people are becoming accustomed to cannabis use. The Pew Research Center shared some key facts in a recent study. Nine out of 10 Americans say it should be legal for medical or recreational use. Over half of the US and Canadian population has tried weed, resulting in a robust market. In fact, according to a recent Gallop poll, more people use marijuana than cigarettes. That’s looking good for the long term, as a study by the University of Michigan shows that more and more young adults living in legal states are using marijuana on a regular basis.

Photo by Vince Fleming via Unsplash

So what’s the problem? Many promises have been made and even more bad legislation. Colorado, the OG of the rule of law, has done best with its tax structure that keeps prices affordable. The strategy has even significantly reduced the state’s black market and pushed consumers into legal, taxed retail outlets. On the other hand, California’s wild and high structure rewarded the black market, undercutting corporations and levying so many taxes that it was almost inoperable in the largest market. The New York rollout has been called the best fiasco of a state and Canadian rollout. Michigan and other states also have unlimited licenses built in, causing far too much product for even a healthy customer base.

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Then comes the promise. Indoor cultivation should be everything to produce the very best, the most flavorful and just the right potency. What has been overlooked is customer concerns about cost. There’s a reason Bud Light is the best-selling beer – decent taste at a great price. Profits have been promised at $3,000 a pound, but losses occur when it’s $1,000 a pound or less. Illegal products have flooded into unlicensed NYC stores, severely hurting tax-paying legal retailers with higher overheads. Federal legalization will also hit the industry as the Southern states take outdoor growing out of the closet and produce at a fraction of the cost of indoor growing.

Where is the future? More and more large mainstream companies like Constellation are taking an interest in it and are leading successful companies for the future. Along the way there will be some company spin-offs and some rightsizing. The best answer for the customer is federal legalization to make it safe, easy, and affordable.

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