Cannabis Industry And Coronavirus: 2020 Predictions

AskGrowers Staff

We are a team of dedicated cannabis lovers and sometimes we can't help but write a few articles about our insights in the industry.

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Cannabis Industry And Coronavirus: 2020 Predictions

Everything pales in comparison to the threat humanity faces today. COVID-19 is the invader that forces the surrender of most countries, and though the example of China shows that we will win this battle sooner or later, right now we all are suffering heavy losses. At the time of writing this article, the number of confirmed cases has reached 413,000 worldwide and almost 65,000 in the USA. There is no need to say that the pandemic affects literally all spheres and industry, and the cannabis business is not an exception.

It may seem that despite the world pandemic, it is on the rise, especially if we talk about recreational cannabis. In recreational states, more people stay at home and therefore they are likely to consume recreational marijuana more often. High demand generates high supply, right? Well, this really takes place in the US – for example, people in Colorado “stocked up on cannabis, just like they were stocking up on toilet paper.” However, if we look deeper, we find out that high demand is not the only key to success. Currently, there are lots of challenges to overcome. Spoiler alert: yes, COVID-19 has a negative impact on this industry, too.

In this article we will look at all the challenges the cannabis industry is likely to face, the best strategies to overcome them, and, of course, the most likely scenarios for this sphere from the social, as well as from the business perspective.

The Situation In The Cannabis Industry – Current Challenges

Everyone who wants to understand what to expect from coronavirus in terms of the cannabis industry needs to know what challenges it is facing right now. Below, you will find the information about them. We will also discuss the matter from the customer’s perspective and focus on what should be done to prevent further losses.

Supply chain challenges – One problem for all

It may seem that America produces everything cannabis growers need to provide their customers with top-quality marijuana, but it is not exactly true. American businessmen used to buy the goods supplied by the low-cost producer, and of course, it was China.

Though currently, China is the only country that seems to win over (at least for now) coronavirus, it is likely to focus on producing things that can help the rest of the world win this battle, too. The political situation remains tense, too. In other words, we do not know when American producers will be able to purchase goods from China, and this means that times get tough for cannabis companies that produce vaping products and all growers who also bought lots of equipment (LED bulbs, heating, and air conditioning equipment, etc.) in this very country.

Generally speaking, the pandemic will force all businesses to switch to the domestic supply chain. On the one hand, it will make the business more independent. On the other hand, companies will pay more to provide people with everything they need, and this, of course, will have a direct impact on the final price of the goods.

Trade shows

Yes, cancellation of the top shows can also impact the industry significantly. They were especially important to producers who were going to present edibles, beverages, creams, lotions, and other relatively new and innovative cannabis products.

Tourism

Yes, the cannabis industry can suffer from the stagnation of tourism, too. In such cities as Vegas, there are dispensary complexes that target tourists. However, the effect of lack, or more precisely, the full absence of tourists is a problem for a few companies, which are pretty big, though. Still, they are likely to cover losses by rising prices. This, however, depends on the management.

Lockdowns

Only essential businesses like groceries or drug stores remain open in most states. The rest of the companies, retail businesses, numerous offices, cafes, bars are locked down to prevent the further spread of the disease or at least slow it down. There are plenty of interesting questions to ask, actually. Which states will decide to lockdown medical dispensaries and recreational cannabis stores? Will the situation lead to the fall of demand in part, due to the higher prices? How can lockdowns possibly affect American society? Should the state governments do this? Let us take a look at this undoubtedly important aspect in more detail.

Coronavirus – Possible Impact On Those Who Need Medical Cannabis

There is no denying that people suffering from such serious diseases as cancer, epilepsy, Alzheimer’s disease, Crohn’s disease, and plenty of other illnesses and disorders are at risk. Let us not listen to skeptics that claim that cannabis is completely useless in everything except for getting people high – patients suffering from severe pain and inflammations, especially those who cannot use regular painkillers due to allergies will prove that they are wrong without any difficulty. Let us focus on the real situation. If the government closes dispensaries, it will affect a large group of patients who are using cannabis to treat the above-mentioned diseases and symptoms.

Consequently, the states should not include cannabis dispensaries to the list of businesses that are temporarily closed. The logic is as follows: dispensaries sell cannabis products, these products are used for medical purposes and therefore can be viewed as the regular medication. Thus, dispensaries can also be considered as essential businesses.

In fact, cultivation and production are no less important than selling medical marijuana. All the parties that play a significant role in providing people with such products need to take all the measures to protect them against the virus. Social distancing is strictly necessary. That is why it is so important for all states (where cannabis is legal, of course) to allow delivery and pickup. The good news is that the work has already begun: Maryland, Illinois, Michigan, and Massachusetts enacted pickups, expanded delivery areas, and even allowed buying greater amounts of marijuana.

What About Recreational Consumers?

Let us be honest, most people can live without recreational cannabis. However, there is a fine line between understanding that recreational marijuana is not something people can urgently need and considering it a drug that is used only to have some fun. Now, we are not going to talk about the economic consequences of locking down the cannabis business, at least for now, but we are going to focus on other, no less important aspects.

Depression & anxiety – Not a big deal?

So, right now the world is locking down retailers that fall under the category of non-essential. Of course, recreational cannabis stores can be considered some of such businesses. At first sight, it seems the right step to take. After all, why do we need to endanger the health of thousands of people just to provide recreational consumers to get high during the quarantine?

There is another important thing to consider – marijuana is often used not only by patients suffering from such serious diseases as cancer or epilepsy, but also by people who fight with depressions, anxiety, insomnia, and other moods sleep, and eating disorders. Dangers of such states can be huge, but even if we assume that a consumer is able to cope with this problem, we will have to admit that he or she will try to replace cannabis with something else. In most cases, this “something” is alcohol, which, unlike cannabis, often provokes aggression. Aggression, in turn, is dangerous in self-isolated society – there is a high probability that domestic violence rates will increase significantly.

Is quitting marijuana easy?

Even if we forget about people who need cannabis to cope with disorders and other serious problems, there is still a huge group of consumers who consider marijuana to be the essential thing in their lives. Let us compare cannabis to cigarettes. In France, for example, the government that decided to close all retail businesses made an exception for tobacco sellers. Everyone who has ever fought the addiction, including tobacco dependence, knows what the consequences of taking away your stress reliever are.

Some (primarily non-smokers, of course) may argue that smoking anything is a bad idea in the time of coronavirus, but it is important also to understand that this is the addiction, and in this case, this word does not have a negative connotation. Freud continued to smoke even after he was diagnosed with throat cancer. This is an exceptional case but it shows how the addiction really works.

Medical Use Of Recreational Marijuana

We should not also forget that there is a separate group of people who use cannabis for medical purposes but buy it in recreational shops or just in the streets. There are plenty of different reasons why they are doing it: some of them just do not want to register, some do not want to spend their time and hard-earned money on visiting a doctor, some doubt if they get a card, etc. In most states, consuming marijuana is decriminalized, and this also increases the number of people who do not want to get their medication officially. By the way, such cases often take place in neighborhoods where people earn less, and they just cannot afford to spend a few hundred dollars that are not covered by insurance.

The good news is the cannabis dispensaries got exemptions to continue the work in the following cities:

  • San Francisco
  • Alameda
  • San Jose
  • Oakland

The situation is not this bad, and definitely not this good. The thing is that the social need in cannabis, as medical as recreational, is obvious. Even consumers who purchase marijuana for recreational use can face serious challenges during the pandemic, and, considering the danger of increasing accidents of domestic violence and other crimes committed under the influence of alcohol or drugs, the states should respond to the existing problems as soon as possible.

Socio-Economic Impact Of The Coronavirus Pandemic – What To Expect

On the one hand, coronavirus is not the worst thing humanity has faced during its history. However, it affects every single aspect of our lives, and business is one of the most important of them. So what are the 2020 predictions? It largely depends on the government and states, and some measures should be taken – currently, over 240,000 jobs are supported by legal cannabis. Still, let us sum up everything that was said above and make certain conclusions.

  1. Though people stocked up on marijuana just they stocked up toilet paper and though the demand seems high, it can drop in the near future for plenty of reasons, in particular, it might be explained by the price increase. The price increase, in turn, will happen due to the losses.
  2. The main losses are related to the inability to buy goods in China. The local supply chain can solve this problem, but this is likely to lead to the price increase.
  3. Currently, most states show that they are ready to recognize dispensaries as essential businesses, especially when it comes to medical marijuana.
  4. The industry can overcome the crisis with less cost if the government will provide growers, dispensaries, producers to continue their work and customers to purchase products. The delivery and pickup should be allowed.
  5. Another measure that can be taken by the government is tax cuts for growers, producers, and dispensaries. The government also should relax rules around hiring stuff

As you can see, not all depends on the business. COVID-19 has changed our lives but it has also shown us that we do not know what will happen tomorrow. If one looks beyond the fact the virus that is taking human lives around the globe, it is clear that the virus already has serious socio-economic consequences and will definitely lead to the new ones. It is the vicious circle in which the coronavirus affects the life of society (makes isolation and social distance vital), these changes led to changes in all the existing industries, retail trade, etc., and these changes, in turn, affect the society again. Simply put, this changes the lifestyle of all humanity in hundreds of ways, and the cannabis industry is not an exception.

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