A cannabis recession may be coming and no cannabis business is immune. Prices are rising, operations are expensive to run, over regulation is rampant, local control is stifling, and you can’t even take many business deductions with the IRS because of IRC 280E.
While things like interstate commerce agreements are getting a lot of attention, cannabis businesses should maybe be thinking about how to prepare now for a cannabis recession in the future. Here’s how:
This one is obvious. To a certain extent, cannabis businesses have been permitted to grow relatively comfortably for a while now– mainly because legalization has been somewhat novel and exciting to consumers. Lots of cannabis businesses have invested heavily into their IP, work fleet, fee slotting agreements, and expansion efforts in order to capture the upside of these democratic experiments (before bigger business interests jump in).
However, with a cannabis recession potentially looming, examining work force size and unnecessary expenditures is bound to happen. From the legal front, when cutting employees or trying to bail on goods and services agreements, make sure you know what you’re doing in those respective areas. Missteps or breaches will be undoubtedly costly.
Consider outsourcing what you can