Weedmaps is backed by over 500 non-paying customers

If cannabis is a $50 billion industry, why is Weedmaps blocked by 500+ clients?

Interesting article on Seeking Alpha that caught my eye and ties in with the “marijuana industry is dead” theme we’re seeing in the cannabis space right now. While the world was enthralled by President Biden’s recent marijuana pardon announcement, the devil is in the details, as we highlighted in our immediate analysis of the president’s actions.

IPO Edge’s Donovan Jones points out in the latest public listings from Weedmaps that over 500 clients are now listed as “non-paying” or delinquent. While we at Cannabis.net have pointed out that the marijuana industry has a very serious problem because hemp delta-8s and 9s are now getting you seriously high, especially in liquid form, we’ve been slammed by some people for this article. The criticism has been how can the marijuana industry be dead when a group of analysts’ sales estimates have gone from $50 billion to $60 billion to $84 billion worldwide? How can weed be dead when the industry isn’t even legal in 80% of the world?

The difference we’re talking about is sales and profit, two very different numbers on a balance sheet. While the product’s top-line sales might go to the Moon or Mars if you’re an Elon Musk fan, profit margins for legal cannabis companies are collapsing at record speed. The supply on the illegal, gray, black and legal markets far exceeds the demand. (See Canada, California and Colorado).

While you might see big headlines like $84 billion in sales or “what the marijuana industry is worth,” that doesn’t mean there’s $84 million in profit for everyone in the cannabis industry. Profit margins, the difference between what you charge and your costs, are shrinking fast. Economic conditions and inflation are also forcing consumers to withdraw their cannabis purchases as part of a general savings plan. If gas, meat, and consumer staples are all up 20%, there may be less money left for discretionary things like movies, alcohol, and cannabis.

Which brings me to the latest “canary in a coal mine” that proves our theory, Weedmaps, the world’s top cannabis industry websites as it probably drives 75% of the customers a dispensary gets a month to their doorstep, always out of over 500 customers stiffened. You could argue that if you are a pharmacy or delivery service, Weedmaps is the absolute last vendor you want to stick with, as they are your lifeline for new customers and sales. So what does it mean now that 500+ customers are no longer paying for the service? This means we have many, many cannabis companies on their last breath and running on fumes.

If you’re not paying your main source of new leads and revenue, how bad is your business right now? You might as well throw in the towel if you can’t pay for listings that lead to new customers and returning customers.

Anyone who believes that legalization will improve matters is greatly mistaken. Interstate trade, a transition to efficient markets, will squeeze margins for most states. High-supply states like California, Colorado, and Oregon can flood low-supply states with produce and flowers. And that is just the beginning. If the US legalizes at the federal level, it will give the UN the go-ahead to change the drug treaties that 163 counties are supposed to comply with when it comes to cannabis. We will then enter a new phase dubbed the “global market” where futures contracts will be traded and low-cost providers such as Colombia, Brazil, Mexico, Thailand, Vietnam, Bangladesh and Pakistan will flood world markets with high-quality, low-cost cannabis. What happens when Colombia sends its $0.06 per gram cost of production to the open world market? We wrote that 10 years from now there will be a time when all the weed in edibles and vape cartridges in America isn’t actually grown in America.

So, yes, revenue is rising but profits are shrinking and this trend shows no way of reversing with the current catalyst in the market.

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