Cannabis is a booming industry. Surprisingly, unlike other industries, with the emergence of the novel coronavirus (COVID 19) pandemic, legalized cannabis experienced a positive growth rate. Customers stocked-up cannabis just like toilet paper. However, this particular business scenario was witnessed just before the nationwide lockdowns in different parts of the world.
Gradually with the universal spread of the virus and the increase in restrictions, COVID 19 has affected daily business activities, as well as retail businesses, which made Cannabis a more volatile industry than others. According to market research, the cannabis market is gaining or losing more than 1000 points daily.
Obstacles in the Cannabis Industry
One of the pivotal issues that emerged among the industry leaders during the early stage of the COVID 19 pandemic was whether cannabis is considered as an essential commodity. Strict laws in various nations solely declared the operations of essential products. However, the rise in demand and the underlying medical benefits caused a stir to include cannabis on the list of essentials. Many provinces in Canada like Ontario, Quebec, Alberta, and others have deemed cannabis as an essential service and continued the sale of cannabis with certain restrictions. Similarly, many states in the U.S. including California and Michigan, consider cannabis as essential goods.
After the establishment of cannabis as essentials, the retail sale grew. But, unfortunately, social distancing and limitations for walk-in customers in the stores made it difficult to achieve. For the ease of customers and to increase profitability, market leaders are now focusing on the online delivery of cannabis products. With just a click here, there’s an array of products to choose from that are conveniently delivered.
But online delivery is just a small step towards the stability of this industry. In broader aspects, there are quite a few disastrous impacts of COVID 19 on the cannabis industry. Here are a few points that clear the picture on how the cannabis industry is hit
- Disruption of Supply Chain
An article in Forbes reports that the cannabis industry is recession-resistant. However, it can be hit hard by the disruption of supply chains. Workers’ illness, factory closures, and closed ports can affect the supply chain. Delay in agricultural commodities due to closed transportation across the country and overseas is also striking this industry. However, this isn’t the only problem, there is also a lack of equipment and human resources. With supply chain disruption are inventory shortages like vape pens, cartridges, packages, and other accessories that are imported. Stay-at-home orders are also not allowing employees to return to work. With constant lay-offs in the companies and employees in quarantine, the production is affected even worse.
In the long run, the economic downturn and supply chain disruption will lead to higher logistics costs, which will hit the manufacturers and consumers hard by lowering the overall production and increasing the cost of products. Although all strains are not available due to this adverse situation but still you can get lab-tested OG Kush online at cheap rates easily.
- Adverse Economic Impact
The fact that the cannabis industry is on a rise during the coronavirus pandemic is not the entire truth. Like other businesses, some cannabis firms are seeing setbacks. According to a report, many places in the U.S. like Clark County in Nevada are stocking up. Due to the shutdowns, neighboring Las Vegas is almost closed, which accounted for 80 percent of Clark County’s cannabis business. Similarly, Massachusetts has complied with the lockdown guidelines, closing its cannabis stores and incurring losses. Denver tried the same but opened hours later after public outrage. Now people could order from an online dispensary, Canada and there was no need to physically go and procure weed.
The primary problem with cannabis is it is still classified as a schedule 1 drug. According to CNBC, many banks or financial institutions do not extend financial aid to the cannabis industry as they fear prosecution. But, with shutdowns of production, industry leaders are concerned about paying their existing employees. As per CNN, the cannabis industry wants to have access to financial aid and emergency funding so that they can comply with the guidelines of the States to deliver financial help to their employees. With cannabis being federally illegal, the non-availability of funds is adding more economic distress within the industry.
- Delayed Legalization
The coronavirus pandemic may hurt the legalization status of cannabis, especially in the U.S. Most of the state legislatures are temporarily shut and many cannabis ballot initiatives are canceled as it prevents petition drives needed before the deadline. Forbes reported that due to shutdowns, many states are holding their votes until conditions get under control. For instance, in Mississippi, the focus is shifting towards signing petitions by the next election in 2022. Nebraska also holds its signature campaign out of pandemic caution. The pandemic also hinders the efforts to advance cannabis reform bills in the state legislatures including New York and Vermont, as the sessions are halted due to health concerns.
The Bottom Line
The global pandemic is affecting all businesses and every industry. The nascent cannabis industry is no exception. Insufficiency of resources halts further research on the medicinal benefits of cannabis. Also, the lack of borrowing capital and access to funds creates hurdles to the growth of cannabis companies. However, amidst all these uncertainties, with its therapeutic and medical benefits cannabis will surely find a stronger ground in the business world and continue to relieve people from an anxious mindset and keep them motivated for the future.
You may also be interested in our blog post learning more about social media management for dispensaries.