Only 25% of Cannabis Businesses Profitable; Optimism High

Optimism Grows Amid Economic Challenges in the Cannabies Industry

Just one in four cannabies businesses are profitable, according to a new survey. Yet optimism about the future of their enterprises has increased on the heels of the Biden administration’s push to reschedule cannabies.

Mixed Financial Picture

The survey data from Whitney Economics, detailed in a public comment by the Minority Cannabis Business Association (MCBA), shows that 27 percent of businesses are profitable, a slight increase from 2023 but still lower than the 2022 figure of 42 percent. Additionally, 41 percent of cannabies companies are breaking even, while 32 percent are losing money. Racial disparities in profitability are also notable, with 34 percent of white operators making profits compared to 18 percent of minority-owned businesses.

Economic Distress and Hope for Rescheduling

“The cannabis industry is under economic distress, primarily due to the confluence of heavy federal taxes, lack of access to financial services, and heavy state and federal regulation,” Whitney Economics’ Beau Whitney said. Despite these challenges, 66 percent of mid- and large-sized cannabis companies are optimistic about their future, though only 28 percent of small businesses share this confidence.

Potential Impact of Rescheduling

Rescheduling cannabies from Schedule I to Schedule III could significantly improve profitability by allowing businesses to take federal tax deductions currently barred under IRS code 280E.

Survey Details

The survey, conducted between June 11 and July 3, involved interviews with 206 cannabies business owners across 32 states and has a margin of error of +/-6.5 percentage points.