Only 27.3% of Cannabis Companies Are Profitable

According to Beau Whitney, founder of the consulting firm Whitney Economics, only 27.3% of American cannabis companies manage to turn a profit.

Running a Cannabis Business Is Harder Than Other Industries

Whitney noted that in 2023, just 24.5% of cannabis businesses were profitable, meaning the number of financially successful companies grew by 11% over the year. However, this figure is still far below the national average: in the U.S., 65.3% of small businesses are profitable.

Whitney explained how the issue could be addressed: “Cannabis companies are profitable much less often than the average, which points to significant challenges in achieving profitability. Legislative reform, particularly reclassifying marijuana, would ease the tax burden on the cannabis industry and free up cash flow, making it easier for companies to pay off debt and taxes. Access to banking services would lower the cost of capital and make the cannabis sector more attractive to investors.”

Investment and Legal Reform Are Needed for Growth

Whitney emphasized that sustainable growth in the cannabis industry requires investment in companies involved in cultivation, processing, and distribution. To achieve this, he urges the government to pass laws protecting banks that work with licensed cannabis businesses from sanctions.

Two Major Cannabis Producers Turned a Profit

Whitney did not disclose the names of all profitable companies, but by the end of 2023, Cresco Labs and Green Thumb Industries had joined the list. Cresco Labs’ revenue fell by 2% to $188 million, but the company cut costs and posted a profit of $5 million. Green Thumb Industries increased its revenue by 3.7% to $1.1 billion and earned a profit of $36.3 million.

Curaleaf Still Struggles to Achieve Profitability

However, Curaleaf, the world’s largest cannabis company by market capitalization and founded by former NTV CEO Boris Jordan, has yet to turn a profit. Last year, Curaleaf posted a record $1.35 billion in revenue, but high expenses led to a net loss of $57.7 million. Still, compared to 2022, the company’s losses were reduced by more than three times.