Some, but not all, of the five companies the state has scored as eligible for cannabis cultivation in Arkansas included in their applications estimates of job hires and financial impact. Companies estimate hires between 25 and 60; two estimate payrolls will exceed $1 million.
Beau Whitney, senior economist at New Frontier Data, which gathers information on the cannabis industry nationwide, said that cultivators typically hire between five and 10 full-time employees and 10-20 part time, with payrolls of around $500,000. While his figure is half the payroll estimates of Arkansas cultivators, Whitney said the wages have a X2 multiplier effect, and that “really provides a million dollars of economic benefit to the community.”
Part-timers would do trimming and “beautification”: They “trim the excess of leaves away from the flower.” Those jobs typically go to local residents with agricultural experience.
The economic impact can spread far beyond basic cultivation, Whitney said. In the early stages, facilities usually focus on extracting just the flower, which contains the highest concentration of cannabinoids. But as the market develops, things will change. Some patients will want edibles or extracted oils from different parts of the cannabis plant. That will require more technicians and machinists to do that work, meaning new jobs.
“Just think of it like tomatoes. Tomatoes — you’ve got ketchup, canned tomatoes, stewed tomatoes,” Whitney said. “There are all sorts of different products … the same thing applies. … As you get more and more sophisticated in your product offering, there are more and more employment options.”
But what about profit? Whitney said regulation and the need for security can eat into profits, and drive up the cost to consumers.
“I think the thing that we see, which is common throughout all the states that we analyze, is that from a policy perspective it’s tough to find the sweet spot between policies that support public safety and policies that support economic development,” Whitney said. “If one tips too far … those costs of compliance can be rather significant. … Those costs are passed on to the medical patients. … If there’s too much of a compliance overhead with this, it could have an impact on the number of jobs that are created … because the money is going to compliance rather than towards wages.”
Cannabis cultivation is “not necessarily all that profitable,” Whitney said. Related industries — greenhouse manufacturers and security companies — are springing up, but Whitney’s firm has not yet collected enough data on them to gauge their success. “We see that a lot of the investment is going into those consulting services,” Whitney said, “and the nonplant touching side.”
Natural State Wellness Enterprises, which plans to open a plant in Pine Bluff, is looking to be producing medical cannabis in six to nine months; Delta Medical Cannabis Co. Inc. of Newport owners say they hope to be in business by the end of the year.
Storm Nolan, whose company, River Valley Cultivation, came in sixth in the tallies by the Medical Marijuana Commission and was not offered a permit, said completing a facility from the ground up in six months would be “pretty darn aggressive.” In addition to construction — which will require the laying of water and electricity lines to county-located facilities — cultivators will have to wait on inspections.
Nolan said there is “consensus” that it costs between $5 million and $7 million to get in the growing business. He is more bullish on the industry than Whitney: As to profitability, Nolan said cultivators could make $20 million a year after ramping up. He added, however, “that’s just a spitball estimate” because of unknown product demand. He said the industry needs to “make a lot of progress” to get Arkansas’s patient counts up to 30,000. It is now at 4,100, but Nolan said that didn’t necessarily predict failure, given that it will be months before dispensaries are open and medical marijuana is on the market.
“The biggest hurdle [to patient count] is education and doctors not recommending” medical cannabis, he added.
Dispensaries should make less than cultivators, Nolan said, because of tax law; they can’t take tax breaks on a business selling what the federal government considers illegal.