Cannabis Sales Up During COVID-19

[vc_row][vc_column][vc_column_text]Many industries and businesses are struggling to survive during the pandemic, but the cannabis industry has flourished. Even as dispensaries fought for the classification of “essential business” to stay open in many parts of North America, cannabis sales surged.

As businesses shut down, there was a massive wave of layoffs and people suddenly found themselves without a job, stressed and not knowing what to do. The lockdown prevented people from spending as much time outdoors and removed the option of leisure travel. This situation caused fear and anxiety levels in people to skyrocket. From medical to recreational use, the overall consumption of cannabis went up during lockdown. According to Bloomberg, during the lockdown, cannabis sales have gone up by a whopping 600% as more people are turning to weed as a means of relaxation and to reduce anxiety.

This is the first time the legal cannabis industry has existed during a time of crisis. Most of North America started going into lockdown during the month of March. In Ontario, sales in March almost tripled to 6000 from the average 2000. It further went up to 13000 when people started panic buying weed after cannabis was declared a non-essential business by the Ontario government. A similar surge was seen in California before it was deemed an essential business. Recreational marijuana sales in Michigan were $54.6 million during lockdown from March 9 to May 10. This 62 day period accounts for almost 60% of the total sales since legalization of adult use marijuana on December 1, 2019. Both medical and recreational marijuana is in high demand during these tough times. States where adult use marijuana is banned, medical dispensaries are seeing a drastic rise in new patients. Most medical marijuana users in the US, use cannabis as a means of cheap pain relief and for mental therapy. According to cannabis analytics firm Headset, sales for cannabis infused beverages and edibles has also gone up considerably. North American dispensaries are struggling to cope with the sudden increase in volume. Businesses are maintaining in-store hygiene, social distancing and abiding by the Covid-19 safety protocol to keep their stores up and running safely. They had to quickly adapt to new business models. Some state laws prevent home delivery of cannabis, so stores are taking orders online, on the phone and even have curbside pick up options. Based on 1300 stores in the US using the cannabis e-commerce platform Jane Technologies, the average store revenue is up between 52% and 130% compared to January. The number of new online users saw a sharp climb to 142% during the lockdown.

April 20 signifies an important day for the cannabis industry. 4/20 celebrations usually involve large gatherings and businesses notice a considerable spike in sales and consumption of cannabis products. Michigan saw a sudden rise of 57% in sales during the week of April 13 to 19. Alberta based retail company High Tide announced total sales of $789,000 from April 18 to 20, which was a dramatic growth of 79% from the previous year. This year due to the pandemic, all social gatherings have been banned, but the overall consumption of cannabis on 4/20 was unaffected.

Another important source for cannabis sales during summer is through tourism, popularly known as cannatourism. With the Covid-19 travel restrictions, the tourism industry has taken a major hit this year affecting many other industries that rely on it. Some states such as Alaska, Colorado, Florida and Nevada have been impacted by this, as almost 80% of their business comes from tourism. In Washington, where locals make up most of the market share, sales have been going up during lockdown. States that heavily depend on tourists for pot sales are shifting focus from being tourism centric to strengthening their local market share.

Smaller businesses relying on tourism might need to shut down, as demand has considerably dropped. But they must continue to pay their workers as per the new federal rule and they may not be eligible for government aid as the cannabis industry is still illegal under federal law. The pandemic has shed light on the contradictory stance taken by the Federal and State laws about the cannabis industry, where one considers it illegal and the other an essential business.

Increasing uncertainty and anxiety are responsible for the rise in cannabis consumption during lockdown. In the coming months, as states begin to lift restrictions and reopen for business, the cannabis industry like others will know the overall economic impact of the pandemic.

Here’s how some of the major cannabis producers are doing during lockdown:

• California based Harborside saw a 20-25% increase in sales since the lockdown began.
• Headquartered in Chicago, Green Thumb Industries announced first-quarter revenue of $102.6 million, which is a $30 million jump from the previous quarter.
• US based Charlotte’s Web Holdings Inc. recorded $21.5 million in revenue in its first quarter.
• US based Ayr Strategies reported revenue of $33.6 million in the first quarter.
• Canada based Supreme Cannabis made $9.7 million in revenue and saw a 245% growth compared to last year for recreational marijuana sales.
• Some of the big cannabis producers- Cronos, Aphria, Curaleaf and Cresco Labs, had massive gains in revenue in their most recent quarter.