As fears about coronavirus started to spread in mid-March, anxious shoppers began stocking up on groceries, toilet paper – and cannabis. Buyers obviously feared dispensaries would be closed during the lockdown.
The cannabis industry saw spikes in sales just when other economic sectors were experiencing the opposite. Cannabis dispensaries across the U.S. experienced an increase in sales.
Demand for cannabis surges
In California, sales doubled on March 16 alone. California has over 1,000 licensed retail and home delivery firms, most of which have seen a surge in sales since the outbreak of COVID-19. During a nine-day period that ended on March 21, average daily sales were up 40% in California, according to BDS Analytics, a leading cannabis market research firm.
Sales fall off after peak
In California, Washington and Colorado, cannabis sales were strong for the first half of March, according to point-of-sale data from Headset, a firm that turns cannabis retail data into real-time insights. However, towards the end of the month, there was a drop-off in sales.
One theory is that after stocking up with supplies, buyers didn’t need to go back for a while. Another theory is that with people losing their jobs, consumers had less money to spend on cannabis. Recreational cannabis is more of a discretionary expense than medical cannabis and it will be interesting to see from April’s figures whether recreational sales decreased or not.
Cannabis industry continues to grow
According to Arcview Market Research and BDS Analytics, legal cannabis spending across the world hit $14.9 billion in 2019. This growth of the legal cannabis market by 46% occurred despite challenges caused by overtaxing and overregulation in Canada and California, two of the largest cannabis markets.
The popularity of cannabis continues to grow among consumers and there’s an ongoing impact from new markets coming online and maturing.
Political progress means more markets are opening up worldwide, and struggling markets are beginning to sort out their regulatory frameworks. The legal cannabis market worldwide is expected to grow to as much as $42.7 billion by 2024.
U.S. retail sales for 2020 are predicted to reach $17 billion and this figure has not yet been revised to reflect the impact of the coronavirus. Roy Bingham, CEO, says that he expects the industry to continue to grow, despite the coming economic difficulties.
Florida has adopted a more free-market approach to licensing and loosened product restrictions, so it is beginning to realize the potential of medical cannabis sales.
In Oklahoma, low tax rates and lighter regulations allow citizens to experience the benefits of cannabis use for health purposes, with legal markets out-performing illicit ones and the state’s government benefiting from the healthy tax revenue stream.
A boost in sales in states such as Oklahoma, Maryland and Illinois has increased overall spending growth in the nation. In January 2020, adult-use cannabis sales became legal in Illinois. Arcview and BDS believe Nevada will be the leading state for per-capital cannabis spending by 2024.
Cannabis dispensaries – an essential service in lockdown
Most of the states with recreational or legal medical markets decided to treat cannabis dispensaries as an essential service during the lockdown.
Denver and San Francisco were planning to shut down dispensaries but changed their plans after public outcry. This reflects a dramatic cultural shift in perceptions about cannabis. Policymakers are obviously seeing higher risks than rewards in shutting down dispensaries.
Advocacy groups urged cities and counties to follow the lead of L.A., San Francisco, and others who decided to keep cannabis dispensaries open. They argued that it wasn’t the time to put patients or consumers at risk. Forcing them into the illicit market would simply increase their risk. The pandemic also creates more anxiety which cannabis is believed to relieve.
Some people are upset that cannabis dispensaries have remained open and are selling cannabis to customers at a time when people face special risk from COVID-19 if they have respiratory or lung problems or their immune systems are impaired.
Cannabis industry not part of federal stimulus package
Congress enacted a $2 trillion stimulus package to help beleaguered businesses but it is not available to cannabis companies. This is due to the fact that cannabis is still illegal federally. For cannabis companies to access assistance, they would need to be considered legal by the federal government.
The cannabis industry employs 340,000 people and they pay federal taxes and have to comply with all the coronavirus-related measures. Staffers are wiping down countertops with disinfectant, opening an hour early to serve seniors or those with compromised immune systems, and some states are now allowing deliveries.
In fact, cannabis companies are looking to hire people who have lost their jobs as a result of the virus because they have found themselves understaffed as delivery requests increase.
Online orders for delivery surge
Nevada is only allowing deliveries and barring any in-person sales. In Michigan, sales must be done by delivery or curbside. Stores are offering curbside assistance where people can order cannabis online and text the business when they arrive to have the order brought to the car.
Massachusetts has expanded delivery areas for approved dispensaries and recommends that patients who can afford to do so should buy a full supply, rather than making multiple trips. Shops are limiting the amount of personal interaction between employees and customers.
A final word
Rising sales may look good for cannabis companies, but there are still a number of issues they face. For one, cannabis is still illegal at federal level and access to financing remains a key concern. With the current coronavirus pandemic, the reality is that the cannabis industry will also be affected.
Many citizens would argue the benefit of having access to a calming, non-toxic substance at this time. Cannabis does not have side effects like aggression or domestic violence that often come with excess alcohol consumption.
However, medical cannabis patients are the most vulnerable cannabis consumers and the ones most at risk of serious complications from COVID-19. All possible precautions should be taken to protect them.