Corona Virus & Cannabis

By Justin Johnson

COVID-19’s effect on the cannabis industry has been significant and will continue to impact its evolution well into the future. That said, the pandemic has also proven the cannabis industry to be capable of weathering the storm better than most. It’s been thriving under federal prohibition for decades, so we shouldn’t be surprised by its resiliency, even in the face of this economically devastating pandemic. Let’s take a quick look at the negative and positive impact of COVID-19 on the cannabis industry in 2020.

Negative: Stores Shut Down, Jobs Lost

Some cannabis companies had layoffs in the early days of the pandemic, like most industries, when some states moved to close dispensaries. Unemployment continues to impact millions, including cannabis professionals, as Congress continues to debate additional rounds of stimulus legislation, with the House including cannabis banking provisions in recent bills.

The circumstances are different for the legacy market, who experienced their own struggles early on as cities shut down and people isolated. Operators and employees working in the illicit space will not receive aid under any circumstances, though many provide a comparable service to their community as dispensaries in the legal markets. Even if legislation passes that supports legal cannabis businesses, it is clear that not everyone in cannabis will be able to stay afloat.

Positive: Cannabis Deemed Essential

In many cases across America, the cannabis industry found itself classified as “essential.” Along with grocery stores, doctors, alcohol, guns and other items, cannabis now appears to be a necessary part of American life in the states where it is legal to consume.

Positive: Sales Soar As Stay-At-Home Orders Come In

Essential items flew off the shelves at many dispensaries as quarantines began taking effect. Cannabis was among the bare necessities to see an uptick in sales as the orders came in, where dispensaries were allowed to stay open.

Data from Headset Inc. revealed impressive sales jumps in early and mid-March. Washington saw a 100% increase in adult use sales compared to the same time period period last year, while Colorado jumped 46%. California took the cake, leaping 159% in sales over the period the year before.

This was followed by quite a lull in sales in the following months, but after nearly nine months into this new normal, states like Illinois and Colorado are crushing monthly sales records.

Positive: Temporary Staffing Soars

A surge in temporary staffing slightly eased the impact of job losses. Top temp recruiting firms for the cannabis space reported activity across all sectors of the market. Recruiters noted that roles are not guaranteed to last, but several reported being temporary-to-permanent as operators gauged how the market would come back.

If these roles become full-time down the line, they could serve as the first wave of helping replenish a cannabis industry that had created over 243,000 full-time jobs in America as of February 2020.

Positive: Marijuana Businesses Make & Donate Essential Goods

As the pandemic grew in the U.S., several cannabis companies decided to temporarily pivot production to aid frontline medical and essential workers in their fight against coronavirus. In some cases, companies began manufacturing hand sanitizer to donate. Other brands began donating portions of their sales to COVID-19 relief funds. As well as instances of producers, cultivators and extractors who donated thousands of personal protection equipment (PPE) items to those in need.

Negative: Delays Slow Down Reform Efforts & Rollouts

The coronavirus delivered several state reform efforts setbacks they couldn’t get over. They include New York State, which pegged 2020 as the year it would finally legalize adult use. States across the Midwest also saw medical and adult use efforts halted. As the pandemic took shape, 2021 and 2022 appeared to become the year New York, Missouri, North Dakota, Idaho and other states would have to pivot towards. States in the midst of introducing their adult use market were also impacted. Maine’s slow rollout of its adult use market had already affected jobs and revenue. That hurt was all set to finally end in June 2020, when the market would open. Then came the coronavirus like a tidal wave and washed all those plans away. The silver lining here is that Maine finally did open for business in October, as businesses adapted to servicing customers amidst the virus.

Positive: States Eye Cannabis for Economic Recovery

While states like New York faltered in their attempt to legalize adult-use cannabis in 2020, four states voted for legalization in the November election. Neighboring state New Jersey got a jump on the Tri-State area becoming the first to legalize, which could send a ripple effect through states like New York, Pennsylvania, and Connecticut. Other states to legalize included Arizona, Montana, and South Dakota, which are generally regarded as conservative. We also saw Mississippi residents vote to legalize medical marijuana.

Between cannabis being deemed essential, being accepted by more Americans than ever, and governors starting to realize the massive industry they’ve been suppressing for nearly a century, things are starting to click. Don’t be surprised if several states move to legalize cannabis for the tax revenue alone. Let’s hope they also make the appropriate effort to understand the impact of the war on drugs and create legislation that gives those most impacted by it a seat at the table.

For more on how Covid-19 is affecting the Cannabis industry head to the Happy Munkey Blog for the full article!