The COVID-19 public health crisis reset societies around the globe in just a few short months. With more than 150,000 deaths as of this writing, per the Johns Hopkins coronavirus resource center, no aspect of our lives remains untouched. The Easter and Passover holidays were forced online and over 22 million Americans have lost their jobs in the last few weeks. Global economies are in shambles and economists are virtually guaranteeing a recession (i.e., two consecutive quarters of negative GDP growth).

Regardless of what we call it, the world is turned upside down. Yet another holiday looms, the 4/20 cannabis holiday. Formed during the counter-culture years when cannabis was strictly illegal, the holiday now brings the highest cannabis retail sales year after year. In fact, the 2019 4/20 holiday saw over $90 million in sales in the US alone. Many in the cannabis industry are now wondering if 2020 sales will be resilient and buck the overall economic downturn or follow the path of other industries struggling to maintain any sales.

BDSA’s preliminary data show cannabis retail sales starting to decline after a period of resiliency at the start of the COVID-19 health crisis in the US. Consumers reacted to government shelter-in-place orders by rushing to stock up on their favorite products, driving not only large surges in daily sales but also a dramatic shift towards traditional products, especially flower.

The overall cannabis market was booming prior to COVID-19 and is expected to continue dramatic annual growth from approximately $12.4 billion in 2019 to over $16 billion in 2020, +31% annual growth. Will this spectacular growth continue or be disrupted?

Certain markets like Massachusetts have shutdown large sections of the industry such as recreationally-licensed businesses, while leaving medically-licensed businesses open for now. The availability of cannabis retail stores, often called dispensaries, is critical because cannabis cannot be sold via e-commerce in many locations. This is particularly challenging for home-bound consumers with health concerns, which is one of the reasons states like California and Colorado allow delivery for medical patients.

This highlights one of BDSA’s most interesting data points, the shift from in-store fulfillment to pre-order and pickup, or delivery.

Driving this categorization of cannabis businesses as “essential” is an understanding that consumers are often consuming for medicinal or wellness reasons including pain management, anxiety and stress reduction, and help sleeping. Cannabis occupies an unusual position as a consumer product that satisfies both recreational and wellness needs, and this also complicates which types of dispensaries are categorized as “recreational” or “medical”.

 

Underlying these purchasing motivations are psychological stresses that are driving consumers to refocus on traditional products and brands. IRI, our strategic partners, are tracking shifts in buying habits that include strong preferences for legacy brands like Kraft and Stouffer’s.

The stress of the coronavirus pandemic is impacting the cannabis industry through both government restrictions and regulations, and consumer dynamics. We’ll be closely monitoring industry data and highlighting insights as 4/20 rolls through. Dispensary owners, cultivators, manufacturers, and consumers are all hoping for a glimmer of positivity amidst the current chaos. Yet, if the trending data is to be trusted, we may see conflicting reports of high spending offset by a limited number of customers as people shelter-in-place or find they can’t access retail outlets.


Is Cannabis Essential?

Want to learn more? Register for our next webinar on Friday, April 24 at 3 PM ET/ 2 PM CT/ 1 PM MT/ 12 PM PT where we will discuss cannabis operations as an essential business.  We expect it to be a lively discussion!