Cannabis Knowledge & Insights

Cannabis Inflation Impacts Report (Summer 2022)

After two years marked by crisis and uncertainty following a global pandemic, financial operators in cannabis find themselves navigating a list of new complications and business obstacles. 

But it isn’t all bad news. Many operators benefited from a surge of demand and used this new windfall to enact ambitious growth plans. Others, however, are seeing a declining business environment and raising prices to combat rising inflation costs impacting their margins and business performance. Read ahead for key highlights or download the full report here!

Who We Surveyed

We all know cannabis has tremendous potential, but those of us working hard in the field also know the obstacles in our path often seem insurmountable.

We launched this project to pull back the curtain and share what the leaders in cannabis are currently doing, thinking, and planning as they shape the future of the industry.

To effectively tap into the cannabis business zeitgeist, we reached out to a wide range of operators, investors, and ancillary service providers in every legal market throughout the United States.

As the responses rolled in, patterns and themes emerged across geographic, social, and economic divides.

The greatest strength of the cannabis industry is in our sense of community. There is power in knowing that others are facing, and overcoming, the same issues.

States Surveyed

In the summer 2022 Inflation Impacts survey, we had operators from more than fifteen states respond and share their feedback on the current business landscape, their future plans, and who they blame for the current fiscal climate.

Cannabis Business Environment

Positive Outlook Declining

In last year’s inaugural Cannabis CFO Survey, our findings showed a 76.6% positive/very positive assessment of the current canna-bis business environment.

According to our updated data, only 44% of cannabis leaders reported a positive/very positive assessment of the current business environment.

That’s a decrease of more than 30% in the last year.

Cannabis Business Environment

In last year’s data set, we found that more than 70% of operators saw some/significant improvements in the cannabis business environment.

According to this year’s data, 50% of operators reported some/significant decline of the cannabis business environment in the last 12 months.

A huge shift in the last year!

East Vs West Outlooks Differ

In last year’s data set, we found that more than 70% of respondents reported some/significant decline in the cannabis business environment were in western US states. Our updated survey showed a similar stance with 66% of respondents claiming some/significant decline of the cannabis business environment across the western US states. 

As opposed to the states east of the Mississippi, where only 16% of operators rated the business environment in a decline.

Pricing Impacts

70% of operators intend to absorb the additional costs and ride it out before increasing costs to their customers. Whereas, the other 30% of retailers reported plans to increase prices to com-bat rising inflation costs.

How much of a price increase? According to our reports, customers could see as much as a 10% price increase on retail purchases.

Common Issues

The COVID-19 pandemic had a comparatively limited impact on cannabis operators. 

According to last year’s data set, the top two reported issues, supply chain and difficulty hiring, affected nearly all sectors in 2021.

However, this year’s difficulties are being attributed to the challenging political landscape between the impacts of the Biden Administration and lingering effects from the Trump Administration. 

In addition, the most common issue impacting operators today are supply challenges.

Who to blame for rising inflation?

  • Biden Administration
  • Lingering Effects of the Trump Administration
  • Foreign Influence
  • Petroleum Companies
  • Supply Chain Issues

Key Analysis

During the survey, we allowed for respondents to select as many contributing factors they blame for the rising inflation issues currently impacting the US economy. We allowed for multiple responses since there are generally various reasons contrib-uting to rising inflation and economic downturns. And, according to our data set, 1 in 4 retailers will raise prices by up to 10% in the near to immedi-ate future.

Also, the majority of respondents blame the Biden Administration, lingering effects of the Trump Administration and supply chain to the rising inflation among other reasons.

There’s more waiting to be discovered!

Be sure to take the time to explore our Cannabis Business Knowledge Base. It is the largest repository of free cannabis business educational content in the world. We’ve got pages dedicated to 280E Tax PlanningCannabis Business PerformanceGoing Public in Cannabis, and more.

Plus, you can download the full report here!