Editor’s note: Check out Leafly’s 2019 version of our Legal Jobs Count, which provides a state-by-state breakdown of the 211,000 full-time jobs the legal cannabis industry has created in America.
Cannabis culture has moved in a few short years from an illicit black market to a legal industry in 29 states and the District of Columbia. Earlier this year the data analysis firm New Frontier pronounced recreational cannabis the fastest-growing industry sector in the United States, outpacing electric vehicles, LED bulbs, solar installations and big data.
Legal cannabis sales reached nearly $7 billion in 2016, up from more than $5 billion last year. Many expect sales in excess of $20 billion by 2020, even without federal legalization.
We know tens of thousands of cannabis industry employees exist. But we have no government data on them.
But like any young industry, there’s much we don’t know. For instance, we have no solid government data on the number of people employed in the legal cannabis sector. We know these people and their jobs exist. We see them growing cannabis, producing oils and edibles, selling at retail shops. But beyond anecdotal evidence, and despite the emergence of several data analytics firms devoted to the industry, we have little information on their wages, benefits and working conditions.
“There are no reliable figures for the number of people employed nationally in the legal marijuana industry,” says Morgan Fox, communications manager for the Washington, D.C.-based Marijuana Policy Project.
He’s right. Last year Marijuana Business Daily (MJ Biz) estimated that somewhere between 21,000 and 33,000 U.S. companies get some or all of their revenue from legal cannabis. That includes growers, retailers, infused-product manufacturers, and testing labs, of course, but it also takes into account consultants, technology providers, security firms, hydroponics and other businesses. For those ancillary jobs, MJ Biz uses a common multiplier effect that assumes each of the 7,000 to 11,000 companies directly involved with the cannabis plant will generate revenue for at least three other companies.
Last year a group of Oregon economists estimated that each dispensary there employed at least six people, but it’s hard – and likely inaccurate – to extrapolate those numbers to other sectors of the industry. And it’s difficult to even have much confidence in that six-per-dispensary figure. Some of the biggest product manufacturers and retail shops in Seattle and Denver employ upwards of 100 people each.
The big industry-wide sales estimates are impressive. But the human factor remains elusive. That’s partly because legal cannabis is a young emerging industry, and partly because cannabis remains federally illegal.
Federal prohibition continues to hamstring the industry’s ability to collect and analyze data about its workers. Federal agencies, you see, are the authorities who traditionally collect and tabulate jobs data. The feds dictate to the states how they want that collection done—or, as is the case with cannabis, not done.
The Bureau of Labor Statistics doesn't even have the capacity to count them, because cannabis jobs have no NAICS code.
The U.S. Department of Labor’s data agency, the Bureau of Labor Statistics, doesn’t just refuse to acknowledge the existence of legal cannabis jobs—it doesn’t even have the capacity to tabulate them if the agency wanted to do so. Business and employment data are collected using the North American Industry Classification System (NAICS), which assigns a code number to each occupation. Breakfast cereal manufacturing, for example, is 311230. No specific NAICS code exists for any part of the cannabis industry—and it’s not likely to come into existence anytime soon. NAICS codes are updated only once every five years by a consortium of US, Mexican, and Canadian government agencies. The next update is due in 2017. There is no cannabis code on the agenda.
Even if cannabis were legalized by the federal government tomorrow, it would be years before labor statistics bureaus could break those jobs into a separate category. In a pinch, they’d probably be lumped into 424210, “Botanical drugs and herbs merchant wholesalers,” as suggested in this online cannabis banking thread.
Going After State Numbers
So we have no official national data. What about state numbers?
Consider Colorado, poster child for the new cannabis economy. Because most of the industry remains federally illegal, “there is disagreement across the federal government as to how we collect employment data in the marijuana sector,” says Alexandra Hall, chief economist for the Colorado Department of Labor and Employment. “Until we get the feds on board, we’re going to have some challenges tracking employees.” That being the case, Hall said, “we work around it to some degree.”
27,000 to 30,000 people have MED licenses in Colorado, which allow them to work in the cannabis industry.
Hall has made a few attempts to match up the state’s employer databases with its employee tax databases. But she admits, “we have run into some problems with that methodology. Ours is an incomplete estimate.”
She took a run at it early last year and came up with a figure of 6,000 payroll employees. “Because the numbers are changing at a faster rate than the overall economy, we’re probably not capturing all of it. It might be a third larger – maybe 8,000 workers – but we’re not talking about tens of thousands of jobs we’re not capturing.”
Others disagree. They put the direct payroll figure in the 10,000 to 13,000 range.
Andrew Freedman, director of marijuana coordination for the state of Colorado, also admitted the difficulty of coming up with an employment number for the legal cannabis industry. “There are about 20,000 occupational licenses currently issued, but it’s really hard to say how many of those folks have jobs,” he said earlier last year. “A lot of them are not great jobs, and the people often are pretty transitional, so I’d use a working figure of somewhere north of 10,000.”
Colorado has an indirect occupational tally that other legal states don’t. All employees of state-licensed cannabis companies must maintain a license from the Colorado Department of Revenue’s Marijuana Enforcement Division (MED). They’re like food industry worker cards. The occupational licenses are good for two years and allow the holder to work in the marijuana industry.
The number of active MED cards fluctuates, but in 2016 the number was usually hovered between 27,000 and 30,000. That’s a pretty solid data point. An official with the Department of Revenue added this caveat, however: “We do not track how many of these licensed individuals will go on to work in the industry.”
Taylor West, deputy director for the National Cannabis Industry Association, says she’s heard employment estimates of “30,000 in Colorado alone, based on occupational licenses and ancillary jobs. But even that is very rough, not based on a lot of hard numbers.”
Mike Elliott, formerly executive director of the Denver-based Marijuana Industry Group, also uses the number of MED license holders to come up with a figure of about 25,000 employees. From the number of license holders (27,350), “take off 10 percent for people who may no longer be employed in the industry or who let their license expire,” Elliott says. “That’s just people who touch marijuana – who grow, sell or manufacture it.” He adds, “I’m an attorney and very much part of the industry but I have no occupational license.”
Hunting the Colorado Number
Frustration with the lack of a solid jobs figure led Adam Orens and a group of colleagues at the Marijuana Policy Group, a Denver-based economic consulting firm, to take a run at the data themselves. They thought the number of MED employment licenses was a good starting point, too—but a license itself didn’t necessarily equate to a full time job. By comparing the number of licenses with their own ground-truthed estimate of direct full-time employment, they estimated one full-time equivalent job (FTE) for every 2.14 MED licenses.
The Marijuana Policy Group found that Colorado's $996 million in cannabis sales supported 18,005 full time jobs in 2015.
In their final analysis, published last October, the Marijuana Policy Group (MPG) estimated that there were 12,591 full-time jobs directly supported by the cannabis industry in Colorado in 2015. Using models that calculate additional indirect and induced employment, the MPG report found that $996 million in annual cannabis sales supported a total of 18,005 full time jobs in 2015.
What about 2016? “Year-over-year, if you just look at one state, you can probably scale it up accordingly,” Orens says. “There are a few nuances you’d miss—there was more outdoor cultivation in 2016, which requires relatively fewer workers—but overall you’d have a solid estimate.”
Colorado’s total cannabis sales in 2016 topped $1 billion at the end of October. They were on pace to hit $1.33 billion by the end of December. That 33 percent increase, applied to employment, would push the state’s full time cannabis jobs to 23,407.
The Big Kahuna: California
What about the Golden State? Again, nobody knows for sure. Experts agree on only two things about California’s cannabis market. It’s the largest in the country, and there is virtually no government or institution-backed job data available. “Whatever data we lack in Colorado,” says Joe Hodas, chief marketing officer for Denver-based Dixie Elixirs, “it’s a hundredfold in California.”
'California is a big black hole of data, and it’s half the industry.'
Chris Walsh, editorial director of Marijuana Business Daily, estimates that California represents 40 to 50 percent of all legal medical cannabis sales, nationally. “California is a big black hole of data,” he says, “and it’s half the industry.”
John Kagia is executive vice president of industry analytics for Washington, D.C.-based New Frontier , a data company focused exclusively on legal marijuana industry. New Frontier has formed a partnership with ArcView, the cannabis-focused angel investor network, to produce annual reports and updates on the industry.
“We have not built a comprehensive view of the national legal cannabis job market,” says Kagia. “However, we have seen some state-specific analysis for markets like Colorado and Oregon. In Colorado, the estimates suggest over 10,000 people are employed in the industry. In Oregon, a recent report found that 2,100 retail jobs had been created, but it did not project numbers for the overall industry.” Since each state classifies the industry jobs differently, “it will take some us some time to build a definitive national picture on the legal industry’s employment level,” he adds. “It’s a very difficult number to capture.”
Bringing Light to Job Data Darkness
Marijuana Business Daily, which has been tracking the industry since 2011, included rough national employment numbers for the first time in its 2016 Marijuana Business Factbook.
“It’s very difficult to get numbers in this industry,” says MJ Biz’s Walsh. “The state estimates tend to be way off. Some are laughable. In some cases, people with great credentials are just making shit up.”
'The state estimates tend to be way off. In some cases, people with great credentials are just making shit up.'
MJ Biz does an anonymous online survey of cannabis business owners. One question that was asked of nearly 1,000 respondents was how many people they employ, full and part-time. “We can get an average for each niche,” Walsh says. “Given the darkness of the industry, this is the best way to look at it.”
The results? MJ Biz provides both a conservative and an aggressive estimate. For jobs in which an employee “touches the plant,” the estimate ranges from 55,000 to 88,000. Total industry employment is projected to be from 101,000 to 154,000.
For the industry total, Walsh uses an economic multiplier that projects two ancillary jobs for each direct job. “We also include people from other industries that may have one employee who deals with the pot industry,” he says. “We strive to provide realistic numbers grounded in reality, not to make the industry appear bigger than it really is,” Walsh adds. “We don’t lobby, offer investments, provide consulting services or have any other reason to publish hype. We present a conservative picture of the market.”
At this point, with the federal Bureau of Labor Statistics refusing to acknowledge the existence of a single legal cannabis job, a conservative estimate may be the best we’re going to get.