Jobs and layoffs have been heating up, but pot is still creating work.
Despite recent layoffs in the cannabis industry it remains one of the fastest growing job creators in the country: “The sector employed 243,700 people at the beginning of 2020, up 15% from a year ago and nearly double the number of jobs in 2017.”[1]These numbers aren’t a surprise when one assumes the demand exists in states where recreational use was previously not legal, and opportunity arises exponentially as soon as legislation is passed, but 243,700 is still a significant number for a product that can only be sold in 33 states and 22 of those states is medicinal use only. In fact, the primary reason for the loss of workforce had little to do with consumer demand.
In states like Michigan, legislation pushed thousands of legal jobs into illicit sectors.[2]There is bound to be a learning curve when introducing a previously illegal substance into the public. The long-term projections are still positive. Even after a difficult year in Michigan with the introduction of new legislation the state expects the jobs market to grow in 2020.
This will probably not be the last time the government makes a decision with cannabis that costs hundreds or even thousands of jobs, but the demand is there, and the growth potential exceeds the initial burst one would expect when a new product and service can enter a market. California and Colorado, have proven there is sustainable job growth in this sector. As two of the original states to legalize recreational use, they still lead the country in employment and job creation.
What makes the marijuana discussion so interesting in today’s climate is that it’s potentially one of the most clear cut bipartisan issues. The interest and growth is not only happening in blue states. “The state of Missouri awarded nearly 350 operating licenses for the medical marijuana industry. Now there are thousands of jobs to fill.”[3] While the path to total legalization is still far off the demand is proving to be there, and the successful booms in the economies of states that have introduced marijuana into their markets is becoming too large to ignore.
Any opinions are those of Goldfarb Financial and not necessarily those of RJFS or Raymond James. The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. There is no assurance any of the trends mentioned will continue or forecasts will occur. The information has been obtained from sources considered to be reliable, but Raymond James does not guarantee that the foregoing material is accurate or complete. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Investing involves risk and you may incur a profit or loss regardless of strategy selected. Prior to making an investment decision, please consult with your financial advisor about your individual situation. Raymond James Financial has classified marijuana-related securities as Higher-Risk, Prohibited Securities. Prohibited Securities present the highest level of financial crime risk exposure to Raymond James Financial and are prohibited for deposit, transfer, purchase and/or sale in any Raymond James client account.
[1] https://www.bloomberg.com/news/articles/2020-02-09/layoffs-abound-but-pot-is-still-a-jobs-creator-cannabis-weekly?utm_source=twitter&cmpid=socialflow-twitter-business&utm_campaign=socialflow-organic&utm_content=business&utm_medium=social [2] https://www.mlive.com/public-interest/2020/02/michigan-expected-to-recoup-7000-legal-marijuana-jobs-lost-in-2019-insider-says.html [3] https://www.kshb.com/news/local-news/medical-marijuana-job-fair-attracts-hundreds