Coronavirus Having Disparate Impacts on Cannabis Industries

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    Highs & Lows in the Cannabis Industry

    The coronavirus has caused highs and lows in the cannabis industry. The industry was facing extreme uncertainty in March when the question of retailers was being decided as states began to shut down across the country. In places where state officials deemed the industry “essential” many stores reported record sales. Now that the shutdown has lasted two months, the cannabis industry is facing more uncertainty.

    A Make-or-Break Moment

    California cannabis business are at a make-or-break moment where they will need to adapt to the current situation. Many retails have had to change their business design to allow for curbside pickup as well as delivery options as stay-at-home orders are still underway. Business owners are faced with regulation hurdles including paying extended sick leave for employees who are not working during the coronavirus and protecting employees while they are working. Logistical hurdles include stopping germs in the heavily cash dependent operations.

    Sales Indicators

    Many California cannabis businesses saw increased sales the week the state government deemed them essential. Since then, sales have rose in April 2020 compared to April 2019, but the gain was substantially less compared to monthly sales growth before the pandemic.

    Data from other states shows some evidence that the demand for cannabis is holding strong. However, April marked the first full month of cannabis sales during economic crisis, so it remains to be seen if cannabis sales are “recession proof”. Colorado and Nevada monthly sales both declined as compared to the same months last year. However, experts believe this decline is due to the large amount of tourist sales that both markets rely on.

    Washington, however, does not rely on tourism for the majority of their sales. Washington has a mature cannabis market, as recreational marijuana was legalized in 2014, and could represent a better test case. Washington has seen increased sales in the first four months of 2020. In April, the first full month of quarantine, Washington reported $106 million in sales which is a 20% increase from April of 2019. The fate of the cannabis industry and effects of the coronavirus cannot be determined yet, however, the increase in sales in Washington’s mature market could be a good predictor of the industry.

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