It’s hard to imagine how quickly the world has changed in the first months of 2020 due to the catastrophic Coronavirus (COVID-19) pandemic that has swept the world. One industry that has both flourished and faltered within the wake of COVID-19 has been the cannabis industry.
Even though the cannabis industry generated $15 billion in sales last year and employs 340,000 people, it has still seen the same level of volatility as many other industries due to the COVID-19 pandemic. Just in March 2020, the cannabis industry has seen everything from major fluctuations in sales to supply chain disruptions to go along with a federal stimulus rejection. Let’s explore why COVID-19 having such a powerful effect on the cannabis industry and what will happen to the industry at large once the dust settles on COVID-19.
COVID-19’s Effect on Marijuana Sales
Since the Coronavirus hit the U.S. in early 2020, sales of marijuana have gone through the roof in both the United States and Canada. Case in point: March 16 and 22 saw sales of recreational cannabis rise by 50% across California, Colorado and Oregon. Medical marijuana sales also spiked 41% from the same period a year ago.
Many cannabis consumers are stocking up rapidly, expecting an extended stay indoors in the future that may cause their favorite dispensary to remain closed indefinitely. Add on the stress of COVID-19 bearing down on the U.S. and we’re seeing that the consumption habits of cannabis consumers has risen dramatically to cope with the fear of unknown and prioritize what’s important in life.
All 33 U.S. states with legal medical or recreational markets classified marijuana businesses as an essential service during the COVID-19 lockdown, thus allowing these businesses to remain open even as vast swaths of the retail economy are shuttered. Cannabis dispensaries in these states are essentially being treated the same as pharmacies, thus reflecting a dramatic shift in cultural perceptions about marijuana in recent years.
How COVID-19 is Disrupting Cannabis Supply Chains
Even though domestic cannabis dispensary sales have skyrocketed in a short period of time, global marijuana product supply chains have become incredibly disrupted. Since 90% of vape hardware distributed worldwide are reportedly manufactured by Chinese factories, the supply chain for those products is likely to cause supply backorders that could last months; eating into vape company bottom lines.
COVID-19 has led global cannabis supply chains to scramble their available resources and route options to ensure that products get to where they need to go safely, on-schedule. This is a strange time, and in some ways an opportunity to right many market inefficiencies within the market by swiftly addressing issues and challenges.
Will the $2+ Trillion Federal Stimulus Package Affect the Cannabis Industry?
Even though states have made a significant move to declare marijuana an essential business, the cannabis industry will not see a cent of the $2.2 trillion stimulus package that was passed by Congress in late March. For cannabis companies to access assistance made available through the stimulus package, Congress or the administration would need to dictate their inclusion. Unfortunately, that inclusion has not been made.
Since cannabis has yet to be made legal on the federal level, Congress is treating cannabis companies the same way they would treat any other illegal drug manufacturer or distributor. This means that even though some cannabis industry employers and workers pay federal taxes and are required to comply with other coronavirus-related measures such as paid sick leave coverage, they’re not going to be eligible for relief under the federal stimulus bill.