Growing Pains 

Feds still stymie cannabis market

click to enlarge FED UP: Federal laws still stand in the way of an otherwise blossoming market at places like Hayward's The Garden of Eden.

PHOTO BY DAN MITCHELL

FED UP: Federal laws still stand in the way of an otherwise blossoming market at places like Hayward's The Garden of Eden.

For all the struggles the cannabis industry is facing—slim or nonexistent margins, illicit sales, the enormous costs of running dispensaries—the industry has nevertheless exploded. One can only wonder how huge it would be if the federal government were to legalize weed.

There are now more people working in the cannabis business than there are computer programmers, Marijuana Business Daily reported last week as it issued its annual Marijuana Business Factbook. While there are lots of caveats to this (programmers make a lot more money than budtenders, for example) that's an astonishing fact given that pot is legal for adult use in only 11 states and medical marijuana is legal in only 33.

What's more, the job growth shows no signs of slowing. Thanks to the fact that most governments instituting lockdowns to fight the Covid-19 pandemic deemed cannabis an essential business, the industry was likely saved from near-collapse. When the pandemic hit, last fall and spring, public pot companies' stocks plummeted in value, as layoffs mounted. Tight government regulations and high taxes in California and some other legal states threatened the industry's foundations.

Those problems haven't disappeared, but thanks to continued high demand (in part spurred by the fact that a lot of people are stuck at home with little to do) the employment picture looks good.

By the end of 2020, there will be somewhere between 240,000 and 295,000 people working in the weed biz, according to MJ Business Daily. That's nearly 50 percent higher than 2019's employment level.

By 2024, the number of jobs is expected to grow by another 250,000. It could grow even more if more states legalize or the federal government removes pot's designation as a Schedule 1 narcotic—and more still if legal states ease up on taxes and regulations, and do more to combat illicit sales, which in California are still three times greater than legal sales.

Federal illegality has stymied the growth of the industry in myriad ways: it's hard to get banking services, since federally chartered banks don't want to take the risk of dealing in "narcotics"; it has limited the tax deductions pot companies can take on their federal returns; it makes interstate commerce impossible.

On the other hand, if more legalization doesn't happen, and the pandemic-caused recession turns into a full-on depression, pot likely won't be spared. Congress is now debating whether to extend the $600 in weekly unemployment benefits for people who are out of work due to lockdowns. If that doesn't happen, most observers think pot sales could sink.

The majority of cannabis jobs are in retail shops, and those—especially the smaller independent shops that dot California's landscape—would take the full brunt of any downturn in sales.

In its report, MJ Business Daily made an interesting point: pot is segregated in a way that most other businesses aren't. Therefore, it necessarily supports more retail jobs than it would if weed were sold in liquor stores, gas stations and supermarkets. "If a drugstore generated an additional $300,000 per year in cannabis sales," the report noted, "it might need to hire only a couple of additional employees to handle the increased sales volume."

Meanwhile, it's important to note that, while it's certainly striking that pot workers now outnumber computer programmers (and, as other news accounts have pointed out, librarians, journalists and steelworkers), it's sort of an apples-to-oranges comparison. The information technology sector as a whole employs about 4.5 million people, according to the Bureau of Labor Statistics. That includes marketers, support personnel, administrative workers, etc. The pot industry is dwarfed by Walmart, which employs about 2.2 million Americans.

Finally, while it's possible to make good money in cannabis, the average salary for budtenders in California is less than $40,000, according to Salary.com. Programmers, meanwhile, earn an average of about $91,000 a year.

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