Majority of Cannabis CFOs Think Biden Doesn’t Support Cannabis
Most financial leaders in cannabis don’t trust the Biden administration, new data suggests. On December 14, GreenGrowth CPAs announced the cannabis industry’s first 2021 Cannabis CFO Survey—a 22-page analysis containing business and market outlook data from over 75 cannabis industry CFOs, CEOs, founders, controllers and other financial roles in 20 markets across the United States.
The report showed a lack in confidence about commitment on federal cannabis reform from President Joe Biden’s administration, and it provided some fascinating details of how people in financial roles in the cannabis industry differ in opinion from members of other industry sectors.
Financial leaders were asked their perspective on the cannabis business environment, progress recovering from the COVID-19 pandemic and outlook on raising capital and assessing the potential impact of the Biden administration. “The answers were volunteered by financial leaders throughout the cannabis ecosystem,” GreenGrowth CPAs Chief Marketing Officer Kristofer Lenz told High Times. “We sent emails to our internal distribution list ([over 40,000] mix of clients, prospects and folks who signed up for our newsletter), posted on social media and conducted personal outreach to industry partners who also shared within their networks.”
Notably, over 62 percent of respondents doubt support from the Biden administration. Specifically, President Biden doesn’t have a great track record on cannabis like most other members of the Silent Generation. White House Press Secretary Jen Psaki reaffirmed last July that President Joe Biden opposes cannabis legalization—putting him at odds with top Democrats such as Senate Majority Leader Chuck Schumer and Senator Cory Booker.
GreenGrowth CPAs provided four highlights from the 2021 Cannabis CFO Survey:
- 70.2 percent of cannabis operators feel the cannabis business environment is improving (but only 28 percent of cultivators agree)
- 18.2 percent of operators are stronger financially today than before the COVID-19 pandemic
- 79.2 percent of operators are planning to raise capital, 19.5 percent through an IPO/RTO go-public transaction
- 62.4 percent don’t think the Biden Administration supports cannabis, and 41.6 percent think we are 5+ years away from federal legalization
One problem is the difference in opinion between how cannabis operators in general feel about the health of the cannabis business environment compared to cultivators in particular. While over 70 percent of operators believe the cannabis business environment is improving, just 28 percent of cultivators agree.
“In the last six months, wholesale prices have absolutely plummeted due to oversupply, lack of demand, a lot of other issues, and you can really see in the data, the impact it’s having,” Lenz explained. “There is the East and West divide. Essentially we’re going through this sort of peak and valley evolution in the market. When new markets come online, there’s a lot of pent-up demand, a lot of licenses.”
Lenz explained the difference between newer and older state markets. “So there’s Illinois, Massachusetts, in these sort of newer markets, where the wholesale price is high, demand is really high, and this vision of cannabis capitalism—as people are imagining it—is really thriving,” he said. “But in more states that are older, we’re seeing a valley form. It’s actually happening in Colorado, California, especially where the more and more cultivators come online, the more sophisticated those cultivation opportunities are, the more flower is hitting the market, but the demand is not necessarily catching up.”
This could be perhaps due to the “collapse” of the wholesale value of cannabis crops in California, partly due to sky-high taxes, fees and light-deprivation weed. Growers in the Emerald Triangle in Humboldt, Mendocino and Trinity Counties, for instance, are calling this an “extinction event.”
The insights in the 2021 Cannabis CFO Survey were self-reported a blend of multi-state operators, retailers, cultivators and ancillary service providers throughout the cannabis industry. The report is free for download at the GreenGrowth CPAs website.
The report shows the amount of distrust with the priorities of the Biden administration among financial leaders in the industry. Keep in mind, however, that no president can directly remove cannabis from control under the Controlled Substances Act, but he could, however, order executive agencies to consider either altering the classification of cannabis or change their enforcement approach.