Small California Cities Scheme for Post-COVID Consumption Spaces
Donnell Alexander, pens his second piece for us about the world of  regulated cannabis.
Recent reports wax lyrical about the growth of jobs in the US cannabis sector. Donnell speaks to cannabis job market watchers Danielle Schumacher  and Ryan Rosenfeld to try and get a sense of  what reality really is and where we might be heading.
You can read more about Donnell’s work here
Donnell writes……
At the crossing where people who talk about cannabis industry employment and folks who sometimes write about that work meet, last month’s publication of the 2021 Leafly US Jobs Report elicited a lot of chatter

 

The report, compiled by Whitney Economics, found that the States sustain 321,000 full-time equivalent jobs, primarily in The West.

 

“There are more legal cannabis workers than EMTs and paramedics,”

goes the prevailing Leafly trope.

“There are more than twice as many legal cannabis workers as dentists.”

 

Rivulets of words have been spoken about the report. Minor moving conversation though this might be, the talk is divided, charged, as numbers without context are prone to be.

Toward sharing context, I asked two strong, distinct voices from the West Coast cannabis employment realm to email back their takes on my questions.

 

Danielle Schumacher

 

Danielle Schumacher is co-founder and CEO of THC Staffing. She is also Chair of the Drug Policy Committee of the National Lawyers Guild and serves on the Board of Directors for the Women’s Visionary Council. THC Staffing has partnered with both Women of Color in Cannabis for WOCC CannaCareers — a vetted job board and webinar series about career pathways — and the Supernova cannabis workforce development program, funded by the City of Oakland.

 

Ryan Rosenfeld

 

Ryan Rosenfeld is founder and President of Greenforce Staffing, a full-service labor solutions company based in Oregon. A licensed medical cannabis grower for many years, he founded Greenforce in 2016. Before joining the industry, Rosenfeld worked in the health care and medical device sales fields.

 

DA: Early in the report there’s that crazy-sounding 32 percent year-over-year industry job growth number — for a 2020 that saw the worst overall job growth since World War II. There’s gotta be a gimmick or noise in there. What’s going on?

RR: There are few job segment big-bangs left. The obvious ones in my opinion are cannabis and alternative energy. We are currently experiencing the settling of the first stars with a rapid acceleration towards the cosmos. Ratios and percentages can be deceiving. Most of that job growth is legitimate, but some is also from the fact that many of these legalized states are still toddlers in cannabis years. There is no real foundation or precedent on the market, demand and sales.

Starting a business is already very challenging. Starting a cannabis business in a freshly legalized state has even more unknowns and hurdles. Sometimes you think you need 10 people to run your facility, but once you are operational, you realize it’s 20. Early market fluctuations are to be expected and job growth and loss will reflect that.

 

DA: About that crazy-sounding 32 percent year-over-year industry job growth number — what’s going on?

DS: TBH, this entire report is very questionable. (And according to their methodology is based on speculation more than actual numbers) And the vast majority of cannabis industry reports and press releases/sponsored content are framed to promote a false narrative….

 

superficial and naive at best;

predatory and aggressively misleading at worst.

 

I don’t think it’s always intentional, and in the case of Whitney Economics I don’t know what their motivation is. In general, I believe most reports put out by for-profit companies are to attract and appease investors and regulators. The cannabis industry is part of capitalism which is obsessed with “bigger is better” and mostly disregards qualitative data.

 

DA: From the report:

“In real numbers, the cannabis job growth in 2020 represents a doubling of the previous year’s US job growth. In 2019, the cannabis industry added 33,700 new US jobs for a total of 243,700.
Despite a year marked by a global pandemic, spiking unemployment, and economic recession, the legal cannabis industry added 77,300 full-time jobs in the United States. That represents 32% year-over-year job growth, an astonishing figure in the worst year for US economic growth since World War II. Outside the cannabis industry, the US economy shrank by 3.5%, the unemployment rate almost doubled, and nearly 10 million Americans saw their jobs disappear.”

 

DA: It’s a remarkable number. Explain how a quarantine labor tightening and overall growth can coexist?

RR: It’s a perfect example of necessity being the mother of invention: Supply / Demand. We saw a significant drop in revenue (labor requests) in April and May of 2020, only to nearly triple by June. Everyone had to get creative. A number of operators went from one shift to two-three per day to allow for proper spacing.

When a number of these facilities were built out and designed they didn’t set aside six-foot spacing between production employees. Add licensing and METRC transfers into this equation and compliance becomes pertinent also. Sales is the ultimate driver, and you saw a lot of expansion happen in 2020 to account for this and the growing space needed for the labor needs that accompany it.

 

DS: I’m not convinced that there was real growth in 2020. Among the complicating factors are that as more jurisdictions create licensing, there is more demand. And as more people see cannabis as essential, more people are trying it. As the industry becomes more formal and regulated, there will be more official data. In other words, there may simply be more documentation, not more growth.

I believe a large portion of “growth” is from turnover. For example, often when a large company advertises hundreds of jobs, it is because they acquired a company and are replacing the current team. (Or they are not really hiring that many people, but they want to advertise that they are because it looks good to regulators, etc). Some “growth” is from hiring two part-time employees instead of one full-time employee, to avoid having to offer benefits.

 

DA: I’ve heard fairly incredible profit numbers for delivery operators? How has that been reflected in the driver workforce.

DS: Due to the pandemic, there are more jurisdictions allowing delivery and more people wanting delivery. I have seen an increase in demand for delivery drivers, but more profit does not necessarily translate to better pay for drivers. Delivery drivers tend to be contractors who have to provide their own vehicle, and they do not have as many protections as on-site employees.

 

DA: Before we get too deep, what’s the point of even differentiating between the East and West Coast markets?*

RR: What is the point of differentiation between French and Oregon wines? They are totally different, but the same in some regards. At this point in the U.S., each state is operating in its own fashion under many different rules and stipulations on licensing, sales, distribution, cultivation, etc. I think it’s great for the up-and-coming states to take note about the pros and cons of each model. Here in Oregon it was an open market, with little barrier to entry, but a state population of only four-ish million. It was saturated quickly and then needed a tune up. Other states are taking a far different approach.   I’m from the East Coast and know the cultural differences, but what really sticks out to me is the population density and proximity of all these different states. It makes crossing state lines very easy and common and that in itself will force some states to adopt and adapt to legalization quickly. The Western states are far more spread out.

 

DA: What were the most striking overall numbers, specifically from an industry perspective?

RR: I think the most striking numbers are probably those which are not visible or truly measured. What I mean by this is, the amount of business/sales tax revenues going on in the unregulated market. If we really knew what the illicit market generated, I think you would see every state legalize tomorrow.

Personally, I was excited to see Oregon do over $1B in sales in 2020. Colorado has eclipsed $10B since it went legal. I can only fathom what New York, New Jersey, Florida will do someday.

 

DA: California is such a ginormous market, with varying employment dynamics. How does Southern California being more vertically-integrated than the mom-and-pop oriented Northern Cali workplace affect hiring figures?

RR: The mom and pop model tends to hire from the trusted circle and has people wearing many hats. Vertical integration comes with a lot of upsides, but also a lot of people and processes to manage and requires strong leadership. I also think the geography of the state will come into play. Parts of NorCal are more remote which can create hiring challenges. With Southern California more densely populated it will make recruitment a smidge easier.

 

DA: What do the Whitley Economics findings mean to new states coming online?*

RR: Bo knows. Apologies to Nike.

New Jersey is going to be a monster. New York is going to feel the pressure and bend sooner with its tri-state neighbor online. I think it also sends the Bat Signal to America that the genie is fully out of the bottle: It’s go time. Get on the bus.

 

DS: Readers should be very cautious of data about the cannabis industry. It is fraught with inaccuracies and skewed context. This report contains lots of questionable excuses from employers, and nothing from the employees perspective. For instance, the entire section: “Why didn’t hiring match sales increases?”

 

DA: Does it stand to reason that a lot of America’s unemployed are about to start working in legal cannabis?

RR: One hundred percent. In the post-Covid economy, you are going to see a lot of more traditionally-conservative states eyeing that tax revenue from cannabis legalization. It’s a growing industry —pun intended—with a large runway. If you were just laid off from a stable or traditional industry, why not toss your hat into the ring in an upstart one?

 

DA: Do you see anything in the report that speaks to the prospect of unionization in cannabis?

DS: Regarding unions in general: Twenty-twenty marked a renewed and expanded effort to unionize cannabis companies. All unions are not equal; some are partial to the employer.

Conditions that are leading to more employees desiring union representation. Among them: Not enough staff to keep up with demand leads to unsafe conditions; high turnover rate; large and frequent mergers and acquisitions; lack of regulatory oversight; and a state expanding from medical to adult use.

 

DA: Mexico’s going to be more aggressively focused in exporting. How long before they become a player in the American jobs market?

DS: America is extremely xenophobic, particularly in regards to Mexican labor. In addition, cannabis from Mexico has a reputation for being low quality and controlled by violent cartels. These are all very big hurdles to overcome.

 

RR: I think we will have to see how this pans out. Depends on the funding and money. If they have attractive positions and salaries I think you will see some transfer of skilled labor and executives to Mexico from the US. I have not really thought about this yet and it will be interesting to see play out. Ultimately cannabis is a global industry and you will see talent globe trotting soon, if it’s not already.

 

DA: What role will interstate commerce play in growing jobs in America? Is it possible to see some form of interstate commerce before there’s federal legalization?

RR: Maybe some West Coast agreement between California, Oregon, and Washington, but I’m unsure of it popping prior to federal legalization. When you take into account all of the state laws on packaging, testing, distribution, potency, etc., it seems messy. Getting it from one state to the next is easy, but having a universally-compliant product for each state would be the challenge in my opinion. Anytime there is a new packaging requirement from the [oversight body] Oregon Liquor Control Commission it can take some time and money to retool your branding, packaging, formulas, etc to comply with new guidelines. When you mix a couple states and agencies into that I think it could move slowly and be frustration. Who oversees interstate compliance?

Adam Smith from the Craft Cannabis Alliance has been working on these efforts for some time.

 

DS: I believe interstate commerce will accelerate consolidation, which means MSOs will control even more of the supply chain than they already do. This is not guaranteed to create more jobs, and it will likely lead to an increase in low-paying temp and gig work.

 

DA: California added 23,700 jobs, Oregon added nearly 687. That gap cannot be just about size-of-market. What else is at play in this disparity?

RR: California has 10 times the population of Oregon. It’s also a newer legalized market and due to the size of the state and the complexities of it the job growth is surging more now. If you went back to year two or three in Oregon you would see some similar growth percentages. There is also much more money to be made in CA, thus goals and investments are bigger which leads to both bigger wins and bigger failures. You will see many of both.

 

DA: Florida added nearly 15,000 jobs. Where are the jobs coming from in a state like that, where there’s only medical marijuana?

RR: Production, retail. Sales and distribution, administration, executive and security would be my guess. Retail is the cannabis workforce most consumers see, but the production and cultivation staff is generally sizable and usually remains hidden from site for many reasons.