How COVID-19 Affected the Cannabis Industry
19 June 2020
By now, you must have noticed that 2020 is the year of never-ending turbulence triggered by the novel coronavirus. As a result, markets and industries are crumbling under the detrimental effects of the pandemic.
Photo credit: Terre DiCannabis on Pixabay.com
So what about the world of cannabis? Will the industry survive? According to cannabis industry statistics, sales in 2019 grew by 45.7% in comparison to 2018. The big question is: what will the numbers show at the end of 2020?
The outlook might seem bleak, but there is more than meets the eye regarding cannabis consumption. Let’s take a closer look.
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The Rise in Demand Triggered by COVID-19
As we all know, the novel coronavirus wreaked havoc on the world. All of a sudden, our reality has been turned upside down. Of course, this shocking turn of events caused a lot of stress and frustration worldwide.
People turned to marijuana-based products as a remedy. After all, the first documented use of cannabis as a natural therapy dates back to 2700 BCE. In other words, Cannabis sativa and other strains have calmed nerves and relaxed muscles through the course of human history.
In March 2020, dispensaries and shops have experienced a tremendous rise in demand. The influx of orders was overwhelming at times. For instance, mid-March sales increased by 64% compared to the same period last year.
It seems that self-distancing measures triggered a change in cannabis consumption patterns. Thus, 29% of consumers increased their daily doses.
In essence, the ritual of smoking marijuana as an attempt to block out an avalanche of cataclysmic news became a routine for many. Also, many consumers decided to stockpile on CBD, marijuana, and other products. For instance, 53% of them admit creating a stockpile that could last for more than two weeks.
Safety Measures and Precautions
Aside from the rise in demand, COVID-19 has also brought changes in operations for many dispensaries and shops. What we mean by this is that these businesses had to enforce safety procedures and protective measures. Of course, this has put an extra burden on the cannabis industry. Besides wearing gloves and masks, employees at cannabis shops had to follow distancing protocols. Dispensaries introduced remote work, where possible. Likewise, many businesses had to adjust to virtual conversations with clients. Unfortunately, the troubles did not stop there.
Other Challenges and Problems for the Cannabis Industry
As we said, sales of marijuana and cannabis-based products skyrocketed in March 2020. Yet, the demand flattened in April and May. The reasons for this phenomenon are multi-faceted, and experts are still trying to figure out what happened.
Travel restrictions seem to be the main culprit. As we all know, the cannabis industry is a tourism-reliant market. Once the airports closed their gates, dispensaries had to limit their offer to a relatively small pool of local consumers. The impact of the illicit market is also a significant factor. Cannabis industry statistics show that the illegal market is responsible for up to 87% of the total sales revenue. Of course, hefty taxes on cannabis-based products are not helping with the issue of the illicit market.
The legal aspects limit many marijuana dispensaries to only use cash transactions. In other words, these businesses cannot accept credit cards or payments through banks. Among others, this element poses a big challenge for the cannabis industry in 2020 and beyond. If your patrons are staying at home, cash will not magically appear in your register.
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Can Cannabis Treat COVID-19?
Without a doubt, the economic aspect of the pandemic has rocked the foundations of the cannabis industry. At the same time, the outbreak of COVID-19 sparked an interest in the therapeutic properties of marijuana.
Slowly but surely, the stigma and misinformation surrounding the cannabis culture are finally disappearing. As a result, many began to wonder if cannabis-based products could help treat patients infected with COVID-19. For instance, Canadian researchers have announced findings that cannabis can help treat patients infected with SARS-COV-2. The idea is that cannabidiol can lower our susceptibility by modulating enzyme levels. These findings are not yet peer-reviewed, and therefore, the search for a vaccine continues. Nonetheless, the development of a plant-based drug could signify the turning of the tide for the cannabis market.
COVID-19 has caused changes in the cannabis industry, thus, the effects of the outbreak were both positive and negative. Consumers increased consumption because of stress and overall uncertainty. In simple terms, they needed marijuana to relax and accept the situation.
On the other hand, disrupted supply chains and the introduction of quarantine measures prevented customers from visiting their favorite dispensers. As a result, the sales in April and May dropped after the initial spike in March.
Luckily, cannabis dispensaries have fallen into the category of “essential businesses", and were mostly allowed to remain open, when introducing safety measures. Guaranteeing social distancing, mask wearing and desinfection of commonly touched surfaces are common practices at some dispensaries, while others offered pick up windows. Just like a lot of grocery shops, dispensary (and coffeeshop) owners decided to fit check out areas with plexi glass - a further measure to protect their customers and staff alike. Within the USA, the availability of cannabis delivery services has been life saving to the many immunocompromised medical marijuana users who sheltered in place.
The decision to clasify dispensaries as "essential", made by authorities, has definately softened the blow that would have otherwise crippled the industry.
Read CORONA VIRUS FORCES CANNABIS COFFEESHOPS ACROSS THE NETHERLANDS TO CLOSE IMMEDIATELY WITHOUT NOTICE to learn how Amsterdam coffeeshops were initially not "essential" and see how the local residents reacted to (temporarily) shutting cannabis cafes. Luckily, they are back open again...