How COVID-19 is Changing the Cannabis Industry

How COVID-19 is Changing the Cannabis Industry

Published on Apr 20, 2020

The latest global pandemic, known as COVID-19 (SARS-CoV-2), has infected millions, killed hundreds of thousands and forced the closure of all "non-essentials" businesses across the world. Most people are in quarantine to help decrease the rate of infections, schools must close for the remainder of the year or move to an online platform and unemployment has skyrocketed because businesses can't keep workers on payroll. Areas that are deemed "essential" by the government, such as law enforcement, physicians and healthcare employees, still have to carry out their duties and are finding themselves at the forefront of the battle against the virus.

On the list of essential businesses are cannabis dispensaries and deliveries in a few selected states (both medical and recreational). The government is officially recognizing the public's need for access to cannabis, which hasn't been this publicly acknowledged since the Rohrabacher-Farr amendment, an important 2014 law prohibiting the Justice Department from interfering with state legalization of medical cannabis.

Although this is positive news, it's evident that everyone and everything will be impacted by coronavirus, either personally or tangentially. But how will COVID-19 change the cannabis industry specifically?

What states have deemed cannabis as essential?

First, we must establish which states deem cannabis as "essential" and which states are allowing dispensaries to simply remain open. The difference between the two classifications can vary depending on the state. Still, the consensus is that if a business is determined by the state as essential, there is no obligation to close down shop. Companies that remain open are heavily encouraged to follow federal-posted guidelines for how to operate safely amid this crisis and can apply for grants to help stay open (which could help save a business from closing down for good). Companies that are allowed to simply remain open are quite similar. However, it is up to the owner's discretion to stay open or not. The most significant difference being that those not determined as essential may not meet the requirements to be eligible for state/federal financial grants.

Although most states have ultimately left the decision up to counties to make the last call, this action in itself should still be considered a landmark in precedence for the legitimacy of cannabis in the U.S. While the list below is rather comprehensive, be sure to check in with your local state and county laws before you fulfill any cannabis-related needs.

Dispensaries Are Adapting to Keep You Healthy and High

If you are lucky enough to be close to a dispensary that has managed to stay open during the pandemic, cannabis businesses across the nation have taken certain precautions to not only keep themselves protected from the virus but to keep you healthy as well.

Most dispensaries have changed store hours or limited their services to online ordering only to decrease contact between budtender and customer. To pick up your cannabis products, simply wait in the parking lot of your friendly neighborhood dispensary until an employee delivers the product to your car. Note that some states like Pennsylvania, have outlawed curbside pickup altogether so home-delivery is the only legal means for obtaining your cannabis.

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Thankfully, cannabis businesses deemed essential must adhere to specific and stringent regulations to keep customers safe and out of harm's way from coronavirus. Businesses must wear facemasks, wear gloves, practice the 6-feet social distancing protocol and follow a strict daily cleaning routine of their entire facility. Following these specific protocols may be tedious and costly for cannabis businesses, but they are certainly well worth it for safety's sake and to remain open during this peak period of sales.

Increasing Cannabis Sales During a Nationwide Crisis

Although people are quarantined, there is no doubt that the majority of the cannabis industry is continuing to thrive. Patients and recreational users alike have been utilizing marijuana and its countless benefits to help ease the stress and pain experienced during this crisis, so it's no surprise that cannabis sales have spiked as a result.

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Several reports have come out to further confirm increased cannabis sales. "Cannabis demand has surged in Florida,"writes MKM Partners Research, which says operators saw an average 36% jump in THC product sales for the week ending March 19.

Politico.com reported that California's volume of orders for cannabis has risen by nearly 230%. With this sudden surge in orders, some suppliers have yet to reap the benefits of having sold so much product, rather many are worried about fulfilling cannabis orders fast enough.

These reports are also being mirrored across the state and country lines. The concern for a drop in demand has been replaced with the concern for too high of demand.The New York Post reported that even in Canada, customers have been starting to stockpile THC products for the extended quarantine. Jamie Pearson, CEO of California-based Bhang Inc. stated, "edibles such as gummies, brownies, and chocolates were most popular, probably because they were easier to store and eat, even with gloves on."

Do Your Part and Stay Inside

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At this point, cannabis isn't going anywhere soon. Although the threat of the virus is all-encompassing and has affected every industry tremendously, there's hope that the marijuana industry will remain a stronghold and outlast the crisis. Our team at Where's Weed encourages you to do your civic duty and avoid any unnecessary contact with others. Rather than venturing out into the public and potentially infecting yourself, your loved ones or even your friendly neighborhood budtender, follow suit with your local dispensaries and practice social distancing. Utilize Where's Weed's comprehensive database and online ordering services to buy the cannabis products that you love so much from the safety of your couch.

Future Implications for the Cannabis Industry

Although this crisis will leave a mark on most industries, the cannabis industry has the benefit of being young and constantly developing. Dispensaries have pivoted to the online retail market more quickly than other industries, brands and distributors are continuing to flourish due to demand and the great political movement behind the industry itself will continue to allow cannabis businesses to remain open and not be as badly affected by the pandemic when it all ends.

A Harsh Reality: Mass Layoffs and Closures

Having said this, not every marijuana business has been thriving since the outbreak. There is an increased disparity between dispensaries that are thriving and those that will not be able to survive to see another day. According to an article from Marijuana Business Daily, many businesses are becoming increasingly concerned with their bottom line, resulting in mass layoffs and closures. Sadly because of the current situation, owners are not liable to give an official 60-day notice of closure or layoffs to the employees due to clauses in the WARN Act.

For those that are determined to keep their doors open, several businesses have resorted to hiring temp workers in hopes of meeting the influx of demand, while preserving cash when possible and allowing the ability to take sick leave for established hires.

Cannabis Growers Brace for Impact

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Cultivators of cannabis are also facing trauma due to coronavirus. Consumers who are panic-buying and product-hoarding have significantly stressed the marijuana supply chain. Growers are not able to harvest enough to meet the demand of the public, leading to the immediate need to scale the grow operations. However, they're also unable to buy lights, pots and other essential tools due to the global supply shutdown. This imperative part of the industry is now challenged with the choice to either sit and wait until the pandemic is over and risk the loss of revenue or fight to scale their business and risk over-investment in their production. Unfortunately, the latter would result in a financial burden that growers would not be able to extinguish if the demand drops in the future.

Online Ordering Takes Center Stage

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Although nothing is for certain in the future, online methods for ordering weed will most likely be the new norm for the weed industry, post-COVID-19. Not only is online-procurement healthier and safer, but it is also less costly for businesses once a system is established. Businesses will be able to track their inventory more diligently, better understand what your needs are and ensure that your favorite brand/strain is in stock to keep you coming back for more. But just because businesses are able to lower the costs of product by streamlining business practices, online ordering will never replace an in-person interaction with a budtender so let's hope things get back to normal soon.

The cannabis industry is powerful, but we'll have to wait a few more weeks or months to determine COVID-19's exact impact. While some will flourish, others will inevitably struggle so let's do our best to support our local businesses, consume safely and stay inside until further notice.

Have you noticed a change in the cannabis industry post-coronavirus, either positive or negative? Tell us in the comments below!

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