Whitney Economics will be publishing a report later this month examining the amount of investment required to support the growth of new licensees in the U.S. cannabis industry. Commissioned by CTRUST and Green Check Verified, the report projects the number of new licenses required by states each year through 2035. This report also breaks down the analysis by retail, product manufacturing and cultivation.

Preliminary findings were released last week at the PBC Banking Conference in Washington, D.C. The data shows that between 2025 and 2035, cannabis operators will require an additional $78 billion - $87 billion in start-up funding alone. An average of $6.9 billion per year will need to be funded between 2025 and 2030. In addition, previous investments to date will drive approximately $17 billion - $20 billion in refinancing of existing debt. This is the first time such an in depth forecast of this nature has been produced.

Another aspect of this report is the number of licenses required to support the growth (broken down in terms of retailers, cultivators or product manufacturers). Many states limit licenses to operators while other states are unlimited. Both strategies have their strengths and weaknesses as they often do not examine supply and demand factors in license issuance. In addition, state cannabis regulators have lost sight of operator health and viability in their licensing policies. As a result, based on a recent national survey conducted by Whitney Economics, only 27.3% of licensees nationwide are profitable. The W.E. considers the viability and sustainability of operators in its model. It calculates the number of licenses required to meet the current and future demand by sector.

Some of the licensing analysis we presented in D.C. included the fact that 16 states have already issued too many cultivation licenses for operators to be viable all the way through 2035, meaning there is already enough supply in those states to satisfy all of the demand for the next decade. How can this be sustainable for farmers?

There are several benefits to this type of analysis:

• It can incentivize banks and other financial institutions to begin or increase the level of lending in the cannabis industry.
• With greater participation by banks. it can increase competition on the lending side which will address the imbalance between supply and demand for capital. This will ultimately lower the cost of capital for the entire cannabis industry.
• It can help operators and investors understand the risks in the market entry and investment strategies.
• It can provide Congress with the data they need to articulate the importance of SAFE banking legislation.

The full U.S. cannabis debt report will be available prior to the upcoming Benzinga Investor Conference in October. Beau will be presenting additional findings and insights. When combined with the recently published delinquency report, the cannabis industry now has a much clearer picture of the financial health and opportunities in this U.S.

Learn more at the Whitney Economics website.