Will Cannabis Be Recession Proof?

No one can predict a recession, but it seems likely that some sort of stress is expected on the economy. On a positive note, the big banks have all seemed to dial down the heat on recession fears. During the latest round of earnings here’s what some of them said:

  • “It’s a challenging market, but I think it is important to say that it’s not 2008 complicated,” James Gorman, Morgan Stanley’s chief executive, told analysts.
  • “Nothing in the data that I see signals that the U.S. is on the cusp of recession,” Jane Fraser, Citigroup’s chief executive, said on a conference call.
  • “We’ve looked a lot, very carefully, into our actual data,” Jeremy Barnum, JPMorgan’s chief financial officer, said on a call with reporters. “There is essentially no evidence of actual weakness.”

Yet, in cannabis, many still fear that the headwinds are there for some difficult times. Evan Eneman,  Founder of Sands Lane Holdings wrote that it would be wise to prepare for a significant slowdown. He thinks that cannabis stocks could be regarded as defensive in nature. Meaning they would perform better than other stocks that are negatively affected by a recession. 

Vice Stocks

Investors often point to vice stocks during recessionary times. Yet, alcohol stocks and tobacco stocks behave very differently in a recession. The last big recession was notably the 2008-2009 financial crisis and it was a doozy. The modern-day legal cannabis market wasn’t in existence at that time and so if a recession does occur, there is little history to draw upon. Thus it makes sense to look at alcohol and tobacco.


The Oxford Academic published a study of alcohol trends during the 2008 recession and found that during the Great Recession there was an increase in abstention from alcohol and a rise in frequent binging. The light drinkers scaled back, but the heavy drinkers ramped up. Less money after losing jobs caused some people to buy less alcohol. However, job insecurity and the threat of losing one’s savings or home caused lots of people to drink heavily. The study found, “These results are consistent with the existing literature, indicating that single men and the recently unemployed are most likely to drink excessively during economic crises (Luoto et al., 1998). Further, we note that the odds of frequent binging rose particularly among persons aged 25–34 and 55–59 years, age groups that are highly vulnerable to unemployment and job insecurity during recessionary periods.” That turns out to be one of the largest demographics of cannabis users. 


Moving on to look at tobacco, The National Library of Medicine published a study from the Oxford Journal on Nicotine and Tobacco Research that determined that parents in households that “became income poor” over the period of the “Great Recession” were significantly more likely to report “persistent tobacco use” or “new reported tobacco use.” The study found, “Ninety-five percent of “new reported tobacco users” had evidence of prior tobacco use suggesting the majority were “relapsed tobacco users.” Similar patterns were seen for those who “developed difficulty managing” and “felt worse off.” Even though these consumers had less money they were spending more money on cigarettes because it relieved the negative emotions resulting from stress exposure. The report wrote, “among a sample of lower socioeconomic mothers, who had previously given up smoking, were difficulty coping with everyday problems, stress, and financial pressures.”


Science then supports the idea that economic stress causes consumers to turn to relief in the form of alcohol and cigarettes. Enerman drilled down to see if these same factors will apply to the cannabis consumer and reviewed what could happen:

  • The Illegal Market – If cannabis consumers are stressed about money, will they could turn back to the illicit market since it’s cheaper than the legal market. This could affect the legal players if they see their consumer base go back to the local street dealer. 
  • Medical Vs. Adult Use – Enerman wrote, “The cannabis industry really is two distinct sectors: adult-use and medical, and the differences are profound. As stated in the Cannabis Private Investment Review, the adult-use market is broader and has long-term growth potential, but the medical market has a number of strong characteristics.” Many medical markets offer a cheaper option for cannabis, consumers could potentially shift back to being a patient to save money. Some states charge lower tax rates, so those medical cards might get dusted off and maybe new ones issued. 
  • Mature Support Sectors In Place – The MGO report said, “In a recession, certain sectors may decline, but the diverse array of companies representing the cannabis industry could produce a mixed bag of winners and losers, evening out the industry’s performance as a whole, or even floating poor-performing sectors.” Perhaps the value players will be the winners here, while those luxury craft cannabis producers may find fewer willing to pay extra. It could also be that companies that can offer a way to cut costs on production will succeed while those whose products are seen as ‘nice to have’ but not ‘need to have’ may be challenged.

A report from BDSA found that the cannabis market continues to grow. The report said, “In just a few short years, attitudes towards cannabis across the country have shifted rapidly, with the share of those who have “bought in” to cannabis consumption skyrocketing while fewer and fewer report not being open to consuming cannabis. In Spring 2022, BDSA Consumer Insights data show that 51% of Americans in adult-use states claim to have consumed cannabis in the past six months, up 15% from Spring 2020. At the same time, the share who claim to be rejecters (non-consumers who are not open to consuming in the future) fell from 31% in Spring 2020 to just 23% in Spring 2022.”

So with more cannabis consumers than ever before, if we enter a recession, they may choose cannabis over alcohol or tobacco. However, cost may be the deciding factor and that may shift consumption patterns.

Debra Borchardt

Debra Borchardt is the Co-Founder, and Executive Editor of GMR. She has covered the cannabis industry for several years at Forbes, Seeking Alpha and TheStreet. Prior to becoming a financial journalist, Debra was a Vice President at Bear Stearns where she held a Series 7 and Registered Investment Advisor license. Debra has a Master's degree in Business Journalism from New York University.

Leave a Reply

Your email address will not be published. Required fields are marked *

Get the latest cannabis news delivered right to your inbox

The Morning Rise

Unpack the industry with the daily cannabis newsletter for business leaders.

 Sign up

About Us

The Green Market Report focuses on the financial news of the rapidly growing cannabis industry. Our target approach filters out the daily noise and does a deep dive into the financial, business and economic side of the cannabis industry. Our team is cultivating the industry’s critical news into one source and providing open source insights and data analysis


Recent Tweets

Back to Top

Get the latest cannabis news delivered right to your inbox

The Morning Rise

Unpack the industry with the daily cannabis newsletter for business leaders.