If somebody would have asked this question a few weeks ago. The answer would have been quite different. Since the U.S. authorities deemed marijuana businesses as essential, many states with legal status saw an increase in cannabis sales. Illinois, California, Michigan, Oregon, Ohio, New York, Washington, Colorado, and New Jersey – all states kept licensed dispensaries open for people to purchase cannabis products.
In fact, several U.S. cities started to issue the same protocol. Due to this, cannabis companies saw an immediate increase in cannabis sales. People started stocking up on cannabis. And according to a CNBC report, cannabis sales surged by a significant percentage as demand increased. However, the total impact of the virus on the cannabis industry does not look good. We have to face the fact that the coronavirus has crippled the global economy. Cities are under lockdown and most businesses including cannabis will face financial backlash. So, without further adieu, let’s dive right into the impact of COVID-19 on the cannabis industry.
Cannabis Sales
As mentioned in the opening introduction of this write-up, cannabis sales surged initially. But here are some statistics that will help you learn how far the sales went.
Key cannabis industry players revealed that compared to last year, marijuana stores saw an increase in sales. The average revenue used to be 50 percent or less but now the revenue has gone up by 130 percent. Not only this, but Jane technologies, one of the major e-commerce platforms reported an increase in new online orders. The number of new users has increased by 142 percent in just one month.
California, where marijuana businesses are essential also saw an increase in the sales of edibles and beverages. The wholesale market also saw a 48 percent spike in cannabis orders. And by the mid of March THC product sales were up by 39 percent in a few U.S. states.
Although, you have to keep in mind that these sales saw a surge due to the increase in demand. People binge stocked cannabis, amounting up to 30 days. On the contrary, dispensaries had to lay off employees, reduce the working hours, and face criticism as more and more people feared the spread of novel coronavirus. Not only this, but the fear of going out has also caused less traffic in cannabis shops which ultimately means decreased sales in some areas.
Supply Chain Distribution
Let’s face it, the cannabis industry gets directly hit by the impact of the pandemic. The cannabis industry like other industries has manufacturing operations in China. The country where coronavirus originated. China is one of the leading manufacturers of vape products. Since China was under lockdown for several months, the vape industry faced a huge set-back. The supply chain of vape products came to a halt and cannabis companies in the U.S. could not receive newly manufactured supplies. So, overall these companies were greatly impacted.
Since the situation in China has improved, the supply has retrieved, but it might take a while for all operational units to get back on track. In addition, the cannabis cultivation supply chain industry also faces a setback. Most suppliers from different countries have closed ports and businesses. This means that an anticipated supply of agricultural equipment, grow lights, and other supplies will also decrease. All in all, the supply chain industry has definitely seen a major pitfall.
Consumer Consumption Pattern
Interestingly, despite patients and other canna-users stocking up on a 30-day supply. The question of whether you should smoke cannabis or not is bothering everyone. The reason being that individuals with respiratory problems are more prone to the risk of coronavirus. And the word is on the street that lung health is crucial to survive the coronavirus symptoms. In fact, nowadays you might be coming across articles that talk about the impact of cannabis smoking on lung health. And how it can destroy your first line of defense against the novel coronavirus.
Also, you have to note that COVID-19 affects the lungs causing an individual difficulty in breathing. So, these days most doctors believe that cannabis smoking is not the recommended method of ingesting marijuana into your body. Moreover, in these crucial times, it is vital to keep the immunity strong, lungs free of smoke, and respiratory tracts devoid of congestion. So, this is a perfectly good time to select other forms of consumption such as edibles, tinctures, oils, sublingual, and topicals.
In fact, we saw a surge in the sales of marijuana edibles and beverages in Florida. This also means that people have already started using other forms of cannabis. It is time for you to jump on the same bandwagon and order non-inhalable products.
Cannabis Trade Shows
Due to travel restrictions amidst the pandemic and authorities placing social-distancing protocols everywhere. Cannabis companies have called for trade show cancellations. Unfortunately, cannabis trade shows are important for businesses from the marketing point of view.
Every year brands big and small gather in the trade shows to showcase cannabis products to a variety of audiences. To help canna-businesses grow, products are marketed through these trade shows. However, for now, the trade shows that were supposed to take place in the US, Canada, and Europe, remain canceled. Also, companies that were looking forward to either merging with big brands or solely display products will witness a decline in both operational and sales activities.
Canna-Tourism
Not all is good in the cannabis land. In other words, when most areas in the U.S. are seeing a significant rise in sales. Some areas have seen a decline in revenue this month. It happened because most businesses rely on tourists to increase their overall revenue or profit. While travel restrictions are in place, such businesses have to sit on the back burner until the situation simmers down.
Also, the cannabis industry has roots in manufacturing, cultivation, processing, and even tourism. Each sector of the industry will face a major impact. The tourism industry, on the other hand, is no exception. It faces the same fate. Cannabis industries have expanded into bistros, event centers, and consumer-facing processing centers. Such expansion relies largely on tourists. As tourist footfall declines all these centers and complexes will definitely face huge losses.
Insurance Policies
This is another aspect of the cannabis industry that requires the utmost attention. Several canna-businesses take up insurance plans. Some insurance packages are already in place while others still hang by a cliff hanger. Simply put, most cannabis ventures have no provisions of such plans. Unfortunately, even businesses with insurance are facing a hard time. Because there are no arrangements for the disruptions caused by this virus.
Not just that, the CBD industry also had to lay off employees, and ask them to take leave without pay. And the states where cannabis businesses are not deemed essential have to face forced shutdowns. Until further notice, most cannabis businesses will remain shut and incur losses. However, the major concern is that they don’t have any cannabis insurance policies to back up the losses. The losses they suffer will negatively impact the future of their businesses. All these businesses can hope for is the situation to get back on track while they find strategies to cope up with the losses.
Additional Changes
Another challenge that most cannabis companies face is the supply of finances. We all know that marijuana is illegal at the federal level. With this status, it is even harder to get financial support from banks. Although, last year a majority of the U.S. House Representatives passed the SAFE Banking Act Bill, which is still to become a law. If the bill were already a law, banks would have started doing business with cannabis companies by now. As of now, no such provision is in place, and the bill has to still become law. This means that with a lack of financial supplies. The companies can not even buy extra raw material to survive the lockdown situation.
However, to manage the current financial situations, companies would have to set up inventory systems. These systems will help them manage the supply chain factor. You see, with inventory monitoring, as a business you know when to order and how much to order. Also, most cannabis companies should by now have an alternative supplier. Like most countries around the world face shutdown, an alternative supplier is the best option. This also means that companies should struggle to produce their own raw material.
Final Thoughts
The impact this virus has on people’s health, businesses, and other things will determine the future of the cannabis industry. The novel coronavirus has impacted millions of lives and thousands of businesses. This also means despite being called essential, cannabis and other businesses are still incurring huge losses. Although, we cannot deny the fact that these shutdowns will eventually cause the virus to not advance.
In fact, to help curb the virus the cannabis industry is accommodating telemedicine and online 420 evaluations in its module. Measures such as curbside deliveries, safe takeaways, online deliveries, and limited patience capacity are already in place. These methods will help the marijuana industry fight COVID-19 while the losses in sales and revenue, for now, are unavoidable.
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