Survey: 58% of growers consider the current state of cannabis to be “poor” or “terrible”.

While states across the US continue to endorse the new wave of cannabis legalization, it doesn’t mask the unrest within the industry. In recent years, the industry has faced problems such as oversupply, falling prices, strict regulations and distribution problems, among others, which often hit farmers particularly hard.

Now, new research reveals exactly how these workers are faring in the current climate. According to Wells Fargo’s third edition of the US Cannabis Grower Survey, the majority of growers have a bleak outlook on the current state of the cannabis market, reports Green Market Report.

The majority of farmers assess the state of the industry negatively

The survey, which included responses from more than 400 growers across eight US states, found that 58% of growers said they felt “bad” or “awful” about the current cannabis market. Specifically, 34% responded, “I feel terrible. Things are looking horrible,” while 24% said, “I feel bad. It’s not looking good.”

In addition, 31% of respondents said they felt “good” about the current state of the market, while only 9% of growers said they felt “good” and 2% said they felt “good” about the current state of the market. felt great.

The survey also examined responses by state and found that California (which is also where most growers are located) was the most negative about the current market, with 66% of growers reporting a “poor” or “terrible” market outlook. Most of the negativity was due to falling wholesale prices, with 34% of respondents citing this as the top cause of stress, followed by restrictive regulations at 29% and a lack of distribution opportunities at 10%.

As the largest cannabis market in the world, California saw cannabis sales fall in 2022, the first since adult-use sales began in 2018. The loss likely reflects a state-wide drop in the price per pound of cannabis.

Falling prices are a major obstacle for all farmers

California growers weren’t the only group raising concerns about falling prices.

About 87% of growers said they sell flowers wholesale at $1,250 per pound or less, up from 83% and 74% respectively at the same levels in fall and spring 2022, respectively. Perhaps even more shocking is that the majority of growers also reported selling flowers for $750 per pound or less, which is below the average breakeven price of $800 per pound. Ultimately, this makes profitability a challenge for many farmers.

That claim echoes a recent survey by Whitney Economics, which found that only 24.4% of U.S. cannabis operators are profitable. The consulting and research firm also hinted that there is little relief in sight for operators, forecasting seven quarters of slower-than-normal growth going forward. The survey also addressed some of the concerns of growers, noting that the success of cannabis companies largely depends on the regulatory structure of the states in which they operate, among other factors that may be beyond their control.

In the long run

Although the current outlook may seem bleak, farmers generally said they would not leave the industry anytime soon. The survey found that only 19% of growers were planning a partial or complete exit from the industry, down from 22% and 27% respectively in autumn and spring 2022.

This persistence could prove problematic, potentially exacerbating oversupply problems and leading to sustained price declines. The survey found that 42% of farmers plan to increase cultivation over the next 12 months.

However, the report also shows that growers are investing in nutrients (65%) and soil (45%), essentially aiming to optimize production while keeping costs down. To illustrate this point, few farmers planned to spend money on expensive items such as lights (32%), irrigation systems (30%) and extraction equipment (16%).