While everyone is chilling at home, well into over a month of mandatory social distancing, demand for cannabis products has never been higher. Sales of cannabis products broke records last months, helped by the transition of many stores to delivery or curbside pick-up. Sales have spiked in California, Colorado, Nevada, Oregon and Washington—all of which are states in which recreational usage of marijuana was legalized. Cannabis-related beverages and edibles have especially seen an uptick in interest, with edibles being estimated to have an impressive 28% increase in growth. Customers in some states have also been observed to be panic-shopping cannabis products in bulk, along with their stockpiles of toilet paper, yeast, alcohol and other groceries, indicating the increasing importance of cannabis-related products as everyday consumer products.
However, despite demand not slowing down and the increasing acceptance of cannabis use, the American marijuana industry as a whole has faced a downturn. Some, such as Acreage Holdings and 4Front Ventures have furloughed employees and terminated acquisitions, citing the significant impact of the COVID-19 pandemic. Marijuana stocks have also dipped down some, though they have generally done better than much of the rest of the market.
COVID-19 has also stymied legalization efforts as state and federal legislators have turned their attentions to the response to the public health and economic fallout from the pandemic. For example, recreational marijuana legislation in New York has been temporarily tabled for now. Cannabis businesses also face additional issues in keeping afloat in that they have typically faced challenges in acquiring banking services. Cannabis businesses also are ineligible to receive aid from the $2 trillion pandemic relief package and similar financial bills passed recently, due to the current status of cannabis remaining illegal under federal law.
Despite these setbacks to the cannabis industry, the COVID-19 pandemic has also sparked some glimmers of hope. In 27 states that have implemented stay-at-home orders, marijuana businesses have been allowed to remain open. Many of these states have deemed cannabis businesses as providing “essential” services (along with gun and liquor stores), such as Florida, Iowa, Louisiana and California. Some representatives have also introduced bills to make legal cannabis businesses eligible for the federal coronavirus relief funds available to small businesses, and others have supported provisions in the next COVID-19 relief bill to increase banking access for marijuana companies.
Months into the COVID-19 pandemic, it is apparent that COVID-19 poses potential hurdles for the nascent cannabis industry and may very well slow recent ascent. However, the pandemic has also highlighted how there is great consumer demand and political pressure at both the state and federal levels for cannabis-related businesses to remain in business. After all this is over, it is likely that the cannabis industry will enjoy increased opportunities and perhaps even legislative changes.
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