A recent report showing a decline of marijuana industry employment over the last couple of years should not surprise anyone who follows the industry. Employment declines are always expected as emerging industries mature. Marijuana is no exception.
The report, published by a Colorado company that specializes in marijuana employment, suggests a 3.4% drop in the number of industry jobs between 2023 and 2024. At the same time, industry sales grew by about 4.5%. So why the disparity?
The Emerging Market Phenomenon
Most of what is observed in the report can be explained by the emerging market phenomenon. Emerging markets, regardless of the industry, have several things in common:
- Business models are in flux.
- Employment models are still being developed.
- Fractured markets create inefficiencies.
- Initial demand for products and services is high.
As a market matures, all these issues seem to settle down. Companies get a better handle on their business models. They begin refining their models to increase efficiency and cut waste. This includes their employment models.
In addition, larger players swallow up smaller counterparts to reduce fracturing. And as the novelty wears off, initially high demand for emerging products and services levels off too. It all leads to the same thing: a more mature market that can sell more products with fewer employees.
States With the Highest Job Growth
The report demonstrates the emerging market phenomena nicely. For example, the states with the highest job growth over the last couple of years are the same states where markets continue to emerge. New York is a prime example. Its marijuana industry workforce grew by more than 200% in 2024.
The largest job losses were observed in states with the most mature markets. Arizona and Illinois saw losses of 52% and 25% respectively. It all makes sense if you step back and look at the total picture.
Other Factors to Consider
Market maturity is arguably the most significant factor in marijuana industry job growth. But there are other things to consider as well. Take taxes. In states where marijuana sales are heavily taxed, legal businesses do everything they can to keep their costs in check. It is natural to limit labor costs given that they are the most expensive part of doing business.
Regulation is another factor. Utah has one of the most tightly regulated medical cannabis markets in the nation. Beehive Farmacy is one of only a small number of businesses licensed to operate medical cannabis pharmacies in the state. Statewide, there are only fifteen pharmacies serving in excess of 100K medical cannabis card holders.
Because Utah limits the number of cannabis businesses allowed to operate in the state, job growth remains fairly static. As long as demand continues in the Beehive State, employment should remain stable. There probably will not be any growth, but Utah is unlikely to see major losses either.
More Changes Could Be Coming
Assuming history repeats itself, more changes are coming. States with emerging markets will see those markets mature at some point, leading to job losses. But even bigger changes could be realized if the federal government finally legalizes or reschedules marijuana.
Both legalization and rescheduling would open the door to corporate interests taking over the market. That would mean greater efficiency and streamlining across all the states. Ultimately, job losses would be expected through market consolidation and the economics of scale.
So what does all this mean? The legal marijuana market is thriving. However, the industry is also learning to do things more efficiently. Do not expect explosive job growth in the marijuana industry over the long term.
